"Yes, the stamp duty holiday has been in play since July last year, but the sheer level of demand we have seen from homebuyers in spite of wider economic uncertainty is extremely impressive"
This is the highest annual growth rate the UK has seen since October 2014.
Average house prices increased over the year by 8.7% in England, 8.4% in Wales, 8.0% in Scotland, and 5.3% in Northern Ireland.
The North West was the English region to see the highest annual growth in average house prices (11.9%), while London saw the lowest (4.6%).
Paresh Raja, CEO of Market Financial Solutions, commented: "The performance of the property market during the pandemic has been remarkable. Yes, the stamp duty holiday has been in play since July last year, but the sheer level of demand we have seen from homebuyers in spite of wider economic uncertainty is extremely impressive, and today's ONS index underlines how this is driving up prices at a rate we have not seen in almost a decade.
"We cannot escape the fact that a bottleneck is likely to form in the coming weeks, with many transactions at risk of not being completed before the stamp duty holiday deadline. Buyers being let down by mortgage lenders - even in cases where a mortgage in principle has been agreed - is already commonplace, so I expect to see this issue become more prevalent between now and the end of June.
"In the medium to long term, it will be interesting to watch how effective the new government-backed 95% mortgages are in enabling more first-time buyers to get onto the property ladder. If successful, this scheme could further galvanise the entire property market in the months to come."
Anna Clare Harper, chief executive of asset manager SPI Capital, added: "Despite being two months old, UK HPI data is relevant because it shows a more complete picture than other house price indices. Annual house price growth rose by 8.6% in the year to February, with no monthly increase on January.
"However, the housing market is not one market. The annual trend was led by exceptional growth in the North West of 11.9%, with double digit growth in the East Midlands and Yorkshire and the Humber. This reflects strong fundamentals in these regions.
"Looking to the future, perhaps the biggest fear among investors is that house prices are reaching a peak, egged on by the temporary stamp duty reduction. The truth is more subtle than this.
"Firstly, different types of property and different locations are experiencing different growth trends now. There are still many locations and types of building (for example, regional blocks of flats) which offer value to investors and potential homebuyers.
"Secondly, the reduced stamp duty has not been the only driver of house price growth over the last year. We also have cheap debt as a result of very low interest rates, which give buyers a ‘discount’; the release of pent-up supply and demand and desire to improve surroundings among existing homeowners; and the ‘flight to safety’, since in times of uncertainty, people want to put their money in a stable asset with low volatility. These trends are likely to hold up throughout 2021."
