Nationwide: March Sees Subdued Growth in House Prices

In March, the Nationwide Building Society released its findings, indicating that house price growth in the UK remained subdued. Despite a 1.6% average increase from the same period last year, prices experienced a slight dip of 0.2% compared to February. This decline, the first since December 2023, underscores the ongoing challenges facing the housing market, particularly concerning affordability and fluctuating mortgage rates.

Robert Gardner, Chief Economist at Nationwide, emphasized that affordability pressures continue to weigh down on housing activity and price growth. Although there was a modest uptick in annual house price growth, it fell short of economists' expectations. The report highlights that while mortgage rates have decreased from their peak levels last summer, they still remain significantly higher than the historically low rates observed during the initial stages of the COVID-19 pandemic.

Despite the subdued growth, there are indications of gradual improvements in affordability. Income increases are outpacing house price rises, offering some relief to prospective buyers. However, Gardner cautioned that while this trend is promising, significant changes may take time to materialize. Many individuals are anticipating potential interest rate cuts by the Bank of England later in the year, which could lead to lower mortgage rates. The Bank of England, while maintaining its main interest rate at 5.25% last month, has signaled the likelihood of rate reductions in the near future, providing hope for prospective homebuyers.