UK house prices experienced a notable increase in March, with annual growth rising to 2.2% from 1% in February, according to Nationwide’s latest data. The average property price climbed to £277,186, reflecting renewed momentum in the housing market despite ongoing economic uncertainties.

March sees renewed house price growth

Nationwide’s figures reveal a 0.9% month-on-month rise in house prices, lifting the average value from £273,176 in February to £277,186 in March. Robert Gardner, Nationwide’s chief economist, noted that this pickup suggests the market regained momentum after a slowdown around the turn of the year.

However, Gardner also highlighted the impact of rising global energy prices linked to developments in the Middle East, describing it as a significant shock that clouds the economic outlook. He cautioned that this could slow UK economic growth and push inflation higher in the near term, with the ultimate effects depending on the duration of the crisis and policy responses.

Housing affordability under pressure

Gardner warned that if the current economic shocks persist, they could reverse some of the improvements in housing affordability seen in recent years. Consumer sentiment is also expected to be affected negatively by the uncertain outlook and rising energy costs, potentially leading to a softening in housing market activity.

The outlook for interest rates remains particularly uncertain, hinging on whether demand or supply-side economic factors are more adversely impacted by the current situation.

Regional variations in house price growth

Nationwide’s quarterly data shows that most UK regions recorded annual price growth in the first quarter of the year, although gains were modest in many parts of England. Two regions—outer South East and East Anglia—experienced annual price declines of 0.7% and 0.4% respectively.

Other areas such as the West Midlands, East Midlands, and South West saw growth below 1%. Northern Ireland led the market with a robust 9.5% annual increase, followed by the North West at 3.3%. Scotland and Wales also posted solid growth rates of 3.0% and 2.7% respectively.

In England overall, annual growth slowed to 0.9% from 1.2% in the previous quarter. Northern regions including the North, North West, Yorkshire and the Humber, East Midlands, and West Midlands saw prices rise by 1.5% year-on-year, with the North West remaining the strongest performing English region.

Industry perspectives on market conditions

Mortgage expert Karen Noye of Quilter observed that recent figures reflect the early impact of mortgage market repricing following the Iranian conflict. She expects house price momentum to soften in the coming months as higher mortgage rates and economic uncertainty weigh on buyer confidence.

Nathan Emerson, CEO of Propertymark, welcomed the uplift in prices as evidence of resilient buyer demand despite economic headwinds. He attributed price growth to improved sentiment and slightly better affordability conditions earlier in the year.

Tom Bill, head of UK residential research at Knight Frank, noted that the full impact of the Middle East conflict on the housing market is yet to be seen, as mortgage offers typically last six months. He anticipates that higher borrowing costs will exert downward pressure on prices and transaction volumes through spring and summer. Bill also highlighted that the significant amount of equity held by homeowners, with more properties owned outright than mortgaged, may help mitigate some of the negative effects.

Jason Tebb, president of OnTheMarket, commented that market activity and sentiment improved at the start of the year, with buyers and sellers proceeding with greater confidence. He pointed out that although interest rate rises now seem more likely than reductions, previous rate cuts have helped affordability and strengthened borrowers’ positions.

What this means for landlords

For landlords, the recent rise in house prices may offer some reassurance about the resilience of the property market amid economic uncertainty. However, the potential for higher interest rates and softer buyer demand could affect rental market dynamics and property values in the months ahead.

Landlords should remain mindful of the evolving economic landscape, particularly the impact of inflation and energy costs on tenants’ affordability and market activity. Maintaining flexibility and staying informed about regional market trends will be essential to navigating this period of uncertainty.

Source: Based on reporting from Property118

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