Annual house price growth turned negative in February, said Nationwide, falling by 1.1% year on year.

This was the first annual decline since June 2020 and the weakest annual change since November 2012.

Prices fell 0.5% between January and February, to £257,406. This was the sixth monthly price fall in a row, with prices now 3.7% lower than the August 2022 peak, said the UK’s largest building society.

Robert Gardner, Nationwide’s chief economist, said: “The recent run of weak house price data began with the financial market turbulence in response to the mini-Budget at the end of September last year. While financial market conditions normalised some time ago, housing market activity has remained subdued.

Iain McKenzie, CEO of The Guild of Property Professionals, added: “The slowdown in house price growth continues, and though these are some of the worst growth figures in recent years, the readjustment is hardly the crash that some thought was coming.

“Prospective buyers will see this as welcome news, as the last couple of years have seen growth that has priced many out of the market.”

What will happen to house prices?

Nationwide’s Gardner suggested it will be ‘hard for the market to regain much momentum in the near term since economic headwinds look set to remain relatively strong’.

He added: “Despite the modest fall in house prices, for a prospective first-time buyer earning the average income looking to buy the typical home, mortgage payments remain well above the long run average as a share of take-home pay.

“In addition, deposit requirements remain prohibitively high for many and saving for a deposit remains a struggle given the rising cost of living, especially for those in the private rented sector, where rents have been rising strongly.”

Jack Roberts, CEO of home moving platform SlothMove, was more positive. He said: “In the short term, the move to negative annual growth could be the shock to the system needed to bring more buyers and sellers to the table.

“Many first-time buyers will see it as their window of opportunity opening, giving them a limited time to swoop before the market rights itself. Their biggest hurdle, as ever, will be the affordability gap, but with rents increasing and borrowing levels relatively settled, it could be their moment.

“Meanwhile for some sellers, keen to cling onto gains made during the pandemic, or facing a costly remortgaging, the downward arrow may spur them to reduce their asking prices and make a deal happen in 2023.”