The slight dip in prices last month came as a surprise and may cause concern to homeowners, who have seen house prices rise steadily for the last three months.
However, experts say this fall is most likely a blip and the trend for price hikes will continue.
Indeed, over the last year house prices have increased by 1.6% which is an improvement on the annual hike of 1.2% in February.
Nationwide’s chief economist, Robert Gardner, said activity had picked up from weak levels at the end of 2023 but remained ‘relatively subdued by historic standards’.
But he also thought, with inflation easing and the cost-of-living pressures reducing too, consumer confidence was likely to return and this would help the housing market gain momentum.
Karen Noye, mortgage expert at Quilter, agreed: “With a traditionally busier period just starting it is unlikely this trend will continue. Similarly, the annual increase is remarkable given how subdued the market has been.”
She added: “As interest rates are set to decrease again and demand expected to pick up during spring, this small monthly dip in prices is likely to represent a blip rather than a trend.”
The fall in house prices comes after mortgage rates took an upturn with many of the top lenders increasing the price of deals. It’s part of a bigger picture for mortgage rates which saw them soar from record lows during the pandemic, then career up to highs of around 7% on average in the summer. They then fell slightly at the start of 2024.
David Hollingworth, associate director, communications at L&C Mortgages said mortgage rates were still lower than they were in summer last year.
“Nationwide’s figures show a monthly drop in prices but the positive annual growth demonstrates some signs of renewed activity in the market, despite what could be seen as a mixed picture for house prices,” he 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 sit around one percentage point lower than last summer.
“Borrowers are readjusting their expectation from the ultra-lows of the last decade.
“As the rate of inflation continues to fall and the likelihood of a cut in base rate gathers momentum, there should be a continued, gentle boost to confidence that will see activity continue to pick up and make for an improved market as the year progresses.”
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