UK property prices dipped slightly last month but are higher than a year ago, according to Nationwide.
The building society said that house prices fell by 0.2% between February and March, taking the average price to £261,142.
Despite the dip, this is 1.6% higher than 12 months ago.
David Hollingworth, associate director at L&C Mortgages, said: “Nationwide’s figures show a monthly drop in prices, but the positive annual growth demonstrates some signs of renewed activity in the market, despite what could be seen as a mixed picture for house prices.
“Interest rates have understandably been at the heart of the subdued housing market in the face of periods of extreme volatility and higher cost of living. Mortgage rates have dropped substantially, and the lowest five-year fixed rates now sit around one percentage point lower than last summer.
“Borrowers are readjusting their expectations from the ultra-lows of the last decade. As the rate of inflation continues to fall and the likelihood of a cut in base rate gathers momentum, there should be a continued, gentle boost to confidence that will see activity continue to pick up and make for an improved market as the year progresses.”
Robert Gardner, Nationwide’s chief economist, added: “Activity has picked up from the weak levels prevailing towards the end of 2023, but remains relatively subdued by historical 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.”
Nations and regions
Northern Ireland was the best performing region in the UK, with Q1 prices up 4.6% compared to the same period last year.
Across England, prices were up 0.4% compared with Q1 2023, while Wales saw a 1.2% year-on-year (YOY) rise. Meanwhile, Scotland saw annual price growth pick up to 3.7%.
Across Northern England (which comprises the North, North West, Yorkshire & The Humber, East Midlands and West Midlands), prices were up 1.7% YOY.
The South West was the weakest performing region, with prices down 1.7% over the year.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The property market has a slight spring in its step, but it’s being weighed down by higher prices and unyielding mortgage rates, which meant house prices eased off in March.
“According to Moneyfacts, at the end of February, the average two-year rate was 5.75%, and by the end of March it was 5.8%. This is hardly a spectacular ascent, but means anyone who was waiting for better rates to emerge will still be sitting on their hands.
“At the same time, higher house prices will mean that some buyers are stuck. Even with all the enthusiasm in the world, a lack of affordability is squeezing them out of the market.”
