House price growth sees largest annual decline since 2009: Nationwide

House price growth fell by 3.1% year-on-year in March – the largest annual decline since July 2009, according to the latest Nationwide house price index.

House prices fell for the seventh month in a row, with a decline of 0.8% in March, leaving prices 4.6% below their August peak.

All regions saw a slowing in price growth in Q1, with nine out of 13 recording annual house price declines.

Scotland remained the weakest performing region with prices down 3.1% compared with a year ago, a sharp slowing from the 3.3% year-on-year increase the previous quarter.

East Anglia, which was the strongest performing region last quarter, saw a significant slowdown, with prices falling 1.8% year-on-year, making it the weakest performing English region. The neighbouring Outer South East saw a 1.5% year-on-year decline, while London saw a 1.4% fall.

The West Midlands was the strongest performing region, with prices up 1.4% compared with a year ago. Across northern England overall (which comprises North, North West, Yorkshire & The Humber, East Midlands and West Midlands), prices were flat compared with Q1 2022. Meanwhile southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) saw a 1.1% decline.

Northern Ireland saw a noticeable slowing in annual house price growth, although prices were still up 1.3% year-on-year. Meanwhile in Wales, annual house price growth slowed from 4.5% to -0.7%.

Robert Gardner, Nationwide's chief economist, said: “The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget. Since then, activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago

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

Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "Although these figures show house price growth is still slowing, we have seen signs of improvement over the last few months at the sharp end.

"Clearly the rise in mortgage rates and cost of living continues to weigh heavily. However, buyers have been tempted back by more choice and less competition compared with much of 2021 and 2022 as the balance between supply and demand improves.

"If anything, the passage of time has made the reasons for moving more compelling but buyers and sellers want to ensure they are not caught out financially so are trying to negotiate best possible terms, which has led to some price softening."

Jonathan Hopper, CEO of Garrington Property Finders, added: “After seven straight months of falling house prices, the market is pushing deeper into correction territory – with average prices now 4.6% down on last August’s peak.

“The slide is widespread too, with the Nationwide’s data showing that prices fell in three quarters of UK regions during the first three months of the year.

“While the direction of travel is unmistakeable, price falls in many areas have been gradual rather than dramatic, especially when compared to the dizzying and unsustainable surge in prices seen during the post-pandemic boom.

“Above all, this is has become a buyer’s market. With the number of sales well down on what it should be for this time of year, sellers and their estate agents are chasing buyers – and proceedable buyers who have their finances in place hold all the cards.

“Buyer demand is holding up far better than many had dared hope, but buyers are intensely price sensitive.

“Buying a home in a weakening market is always disconcerting, but softening prices strengthen buyers’ hands and enable them to negotiate harder. With the mortgage market beginning to settle, falling prices may even provide a window of opportunity for first-time buyers previously frozen out by rising interest rates.

“For now, the spring bounce remains an aspiration rather than a reality, and a further softening of prices looks inevitable until there is greater comfort and clarity that inflation is falling and interest rate rises have peaked.”