House prices fell by 0.2% month on month in March

But annual trend is upwards, say Nationwide

The average UK house price fell by 0.2% month on month in March, although there are signs that activity is picking up, according to a report.

Property values increased by 1.6% annually, taking the average UK house price to £261,142, Nationwide Building Society said.

Robert Gardner, Nationwide’s chief economist, said: “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 prepandemic 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.”

Mr Gardner pointed to signs that consumer sentiment is improving.

He said: “Indeed, surveyors report a pick-up in new buyer inquiries and new instructions to sell in recent months. Moreover, with income growth continuing to outpace house price growth by a healthy margin, housing affordability is improving, albeit gradually.

“If these trends are maintained, activity is likely to gain momentum, though the paceoftherecoveryisstilllikely to be heavily influenced by the trajectory of interest rates.”

The index also included data fortheuk’snationsandregions, showingannualchangesduring the three months to March.

The figures showed that within England there was a split, with house prices generally increasing in northern regions and falling in the South.

Mr Gardner said: “Across northern England (including the North East, North West, Yorkshireandthehumber,east

Midlands and West Midlands), priceswereup1.7%yearonyear.

“Meanwhile, southern England (including the South West, Outer South East, Outer Metropolitan,londonandeast Anglia) saw a 0.3% year-on-year fall.

“London remained the best-performing southern region, with annual price growth recovering to 1.6%. The South West was the weakest performing region, with prices down 1.7% year on year.”

Mr Gardner said Northern Ireland remained the bestperforming area, with prices up by 4.6% compared with the first quarter of 2023.

Rob Wood, chief UK economist at Pantheon Macroeconomics, described the month-on-month fall in house prices as a “blip”.

He said: “Forward-looking indicators continue to suggest house prices will keep rising as mortgage rates gradually tick down…

“We continue to expect house prices to rise 4% year over year in 2024.”

David Hollingworth, associate director, communications at L&C

Mortgages, said: “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 sitaroundonepercentagepoint lower than last summer.”

Martin Beck, chief economic adviser to the EY Item Club, said: “The EY Item Club thinks thefallinhousepricesinmarch will prove only a temporary interruption to a gradual rebound in property values.

“Falling inflation and stillstrong pay growth mean real wages are rising again, while unemployment is very low, consumer sentiment has pickedupandquotedmortgage rates are significantly down on the peaks of summer 2023.”