Data published by Nationwide Building Society showed that housing prices fell by 0.2% in March after rising by 0.7% in February. Economists had expected prices to rise by 0.3%. In annual terms, house prices rose by 1.6%, accelerating compared to February (+1.2%), and recording the second increase in a row. Consensus estimates suggested an increase of 2.4%. As a result, the average price of a typical home (not seasonally adjusted) was 261,142 pounds compared to 260,420 pounds in February. Nationwide said that house prices are now around 3% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.
“Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards. The number of mortgages approved for house purchase in January was around 15% below pre-pandemic levels. This largely reflects the impact of higher interest rates on affordability. As the pressure on the cost of living eases and inflation returns to target level, consumer sentiment improves. Moreover, as income growth continues to significantly outpace house price growth, housing affordability is improving, albeit gradually. If these trends continue, activity is likely to gain momentum, although the pace of recovery is still likely to be strongly influenced by the dynamics of interest rates," said Robert Gardner, Nationwide's Chief Economist.