"Activity is likely to gain momentum, though the pace of the recovery is still likely to be heavily influenced by the trajectory of interest rates."
- Robert Gardner, Nationwide's chief economist
UK house prices fell by 0.2% in March, however, the annual rate of house price growth edged higher to 1.6% in March, from 1.2% in February, according to the latest Nationwide house price index.
The South West was the weakest performing region, with prices down 1.7% over the year, while Northern Ireland was the best performing region, with growth of 4.6%.
The biggest improvement in terms of annual price growth was in the North, where annual price growth picked to 4.1% in Q1 2024, making it the best performing English region.
Across England overall, prices were up 0.4% compared with Q1 2023, while Wales saw a 1.2% year-on-year rise. Meanwhile, Scotland saw annual price growth pick up to 3.7%.
Across northern England (which comprises North, North West, Yorkshire & The Humber, East Midlands and West Midlands), prices were up 1.7% year-on-year.
Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 0.3% year-on-year fall. London remained the best performing southern region with annual price growth recovering to 1.6%.
Robert Gardner, Nationwide's chief economist, said: “Activity has picked up from the weak levels prevailing towards the end of 2023 but remain 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.
"With cost-of-living pressures easing as inflation moves back towards target, consumer sentiment is improving. Indeed, surveyors report a pickup in new buyer enquiries 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 pace of the recovery is still likely to be heavily influenced by the trajectory of interest rates."
Tomer Aboody, director of MT Finance, commented: "Another rise in house prices underlines the confidence being felt in the market.
“Stable interest rates, more favourable mortgage rates than this time last year and less than half the inflation, are persuading buyers that it is time to make their move as the traditionally busier spring market picks up.
“All-important transaction numbers are also rising, albeit from a low base, demonstrating increased confidence among buyers that the worst of the uncertainty and market turmoil may be behind us. Transactional volumes should increase further as sellers take advantage of this stability."
Jonathan Hopper, CEO of Garrington Property Finders, added: “We’re in recovery, not runaway, territory – and this may be no bad thing.
“Two things are clear from the Nationwide’s latest snapshot of the UK’s property market. The surge in price rises seen at the start of the year is easing off, and big regional disparities remain.
“While buyer confidence is back, and the widespread price falls of last year are firmly in the rear-view mirror, price rises are still being tempered by the high cost of borrowing.
“The mortgage market alternated between being an accelerator and a brake for the property market during the first quarter of 2024.
“The flurry of interest rate cuts seen in January fired the starting gun, tempting back to the table thousands of would-be buyers and movers who held off in 2023. But in recent weeks, many lenders have paused their rate reductions, and this is now keeping property price rises in check.
“As a result, the fastest price growth is being seeing in areas where affordability is better. Average prices in Northern England jumped by 4.1% in the first quarter of 2024 compared to the same period last year. Across England as a whole, prices were up just 0.4% over the same timeframe.
“While we may have to wait until the Bank of England’s next Base Rate decision in May before interest rates start to fall significantly, the property market is returning to health gradually and we’re seeing increasing numbers of buyers decide that now is the time to strike, while also being very price sensitive.
“There’s a will to move for many, the challenge is finding a way. As a result prices are likely to meander in coming months.”
