UK house prices fall at fastest annual pace since July 2009

UK house prices fell in March at the fastest annual pace since July 2009, according to figures released on Friday by Nationwide.

House prices were down 3.1% on the year following a 1.1% decline in February.

On the month, prices fell 0.8% in March following a 0.5% drop the month before. This marked the seventh decline in a row and leaves prices 4.6% below their August peak.

The data showed that house price growth slowed across all UK regions. The West Midlands was the strongest performing region, with prices up 1.4% on the year, while Scotland remained the weakest performer, with prices down 3.1%.

Nationwide chief economist Robert Gardner said: "The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget. Since then, activity has remained subdued - the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago.

"It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation. Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year."

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "Underlying indicators of housing demand suggest that house prices will continue to fall in the near term. For instance, the new buyer enquiries balance of the RICS Residential Market Survey remained below the new sales instructions balance for the 10th consecutive month in February, consistent with house prices continuing to fall over the next three months. In addition, the major purchases index of GfK’s consumer confidence survey remained well below its -7 average level in the 2010s, despite rising to -33 in March, from -37 in February.

"Demand will not recover until either mortgage rates or house prices have fallen substantially further. The chances of mortgage rates dropping further in the near term, however, are slim, given that we likely are still several months away from the MPC giving a strong signal that Bank Rate has peaked, and banks might need to raise interest rates to retain deposits. As a result, house prices likely will continue to drift down until monthly mortgage payments fall far enough to bring demand and supply back into balance. We continue to judge that the official measure of prices will not stabilise until it has fallen by about 8% from its late 2022 peak."