The average UK property price fell 0.2% in March from February, according to new data released by Nationwide.
The average UK home is now worth £261,142 – 1.6% higher than in March 2023.
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Falling mortgage rates had helped spur a bottoming out of UK house prices in late 2023 but the impact is diminishing in a ‘subdued’ market.
“UK house prices fell by 0.2% in March, after taking account of seasonal effects. Nevertheless, the annual rate of house price growth edged higher to 1.6% in March, from 1.2% in February,” said Robert Gardner, Nationwide’s Chief Economist.
“Activity has picked up from the weak levels prevailing towards the end of 2023 but remains relatively subdued by historic standards. For example, 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. While mortgage rates are below the peaks seen in mid-2023, they remain well above the lows prevailing in the wake of the pandemic (as shown in the chart below).
That said, long-awaited Bank of England interest rate cuts are expected to provide house prices with a welcome boost. The degree to which the BoE cuts rates and stimulates buyers will hold the key to house price performance during the rest of 2024.
While the news house prices fell in March will be disappointing, experts are confident the decline could prove to be a blip in a recovering market.
“Sellers have every reason to start feeling positive about putting their home up for sale and being able to go on to buy their next perfect property. 2024 has shown a positive trend that house prices are growing once again following three years of economic turbulence,” said Nathan Emerson, CEO of Propertymark.