Housing market remains stable as northern house prices see 'mini boom': Nationwide

London was once again the weakest performing region, with house prices down 1% year-on-year.

House prices fell by 0.2% over the month, after taking account of seasonal factors.

Nationwide predicts that although house price growth remains steady, subdued economic activity will "exert a modest drag" on growth this year,. Overall Nationwide predicts UK house prices to be broadly flat over 2018, with a marginal 1% gain.

Over Q1, Northern Ireland saw the strongest annual rate of growth, with a substantial 7.9% gain, though prices in the region are still furthest below their pre-crisis levels, some 38% below their 2007 levels, while overall UK prices are 16% above.

Wales also recorded a pick-up in house price growth, with a 6.1% year-on-year increase, the highest since 2014. England recorded annual house price growth of 1.9%. Amongst the home nations, only Scotland saw weaker price growth than England, with prices up just 0.2% compared to the same period of last year.

For the fourth quarter in a row, regions in the North of England recorded stronger annual house price growth than those in the South.

While growth in Southern English regions is running at its slowest pace since 2012, the Northern English regions have recorded a gradual acceleration and recorded their strongest growth rate since 2014 in Q1.

However, these trends have so far made only small inroads in narrowing the North-South divide. House prices in the North of England are, on average, still less than half of those prevailing in the South. A typical house in the North of England now costs £163,138, compared to £331,047 in the South.

Robert Gardner, Nationwide's Chief Economist, said: “On the surface, the relatively subdued pace of house price growth appears at odds with recent healthy rates of employment growth, a modest pick-up in wage growth and historically low borrowing costs. However, consumer confidence has remained subdued, due to the ongoing squeeze on household finances as wage growth continues to lag behind increases in the cost of living.

“Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year.

“But historically low unemployment and mortgage interest rates together with the lack of properties on the market is likely to provide some support for house prices. Overall, we expect house prices to be broadly flat, with a marginal gain of around 1% over the course of 2018."

Sam Mitchell, CEO of HouseSimple, commented: "While the UK picture shows price growth is broadly flat, in fact we are seeing two very distinct markets going in opposite directions.

"The north, buoyed by favourable stamp duty conditions and strong employment is seeing a mini boom. While, the south, which hasn't enjoyed the same stamp duty boost, is showing signs of a prolonged slowdown as affordability remains an issue.

"The impact of the stamp duty freeze could well see the north-south divide widen over the coming months."