UK house prices fall more than expected in March

Figures from Nationwide show biggest decline in 14 years

The housing market is slowing down due to high inflation and rising borrowing costs, the lender said. EPA

UK house prices fell 3.1 per cent in annual terms in March, the largest drop since 2009, according to figures from mortgage lender Nationwide.

When compared with February, house prices fell 0.8 per cent.

Economists polled by Reuters had expected prices to fall by 2.2 per cent on an annual basis, and by 0.3 per cent in monthly terms.

“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,” said Robert Gardner, chief economist at Nationwide said.

“Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.”

'More conservative approach'

Experts say that relatively high interest rates and inflation, as well as falls in real wages have deterred home buyers.

"What is clear is that the red-hot property market of pandemic days — when buyers snapped up bigger homes in the race for space, aided by temporary stamp duty incentives — is now behind us with buyers and lenders taking a far more conservative approach towards home ownership," said Alice Haine, personal finance analyst at Bestinvest.

However, James Briggs, head of personal finance intermediary sales at specialist lender Together said there could be "better times ahead".

"With both the prime minister and the Bank of England's Andrew Bailey predicting a sharp drop in inflation by the end of the year, first-time buyers may find there are increasing buying opportunities in the coming months as prices dip further," he said.