Monthly house prices have slowed for seven months in a row, according to Nationwide’s monthly house price index, to 5.1 per cent in March from 5.7 per cent in February.
However, house prices themselves rose by 0.1 per cent over the month to £189,454.
Robert Gardner, Nationwide’s chief economist, said that UK house prices are currently around 2 per cent above their pre-crisis levels. This chimes with LSL’s housing market data which showed house prices have exceeded a peak reached before the crisis in February 2008.
“Economic conditions have remained supportive, with labour market conditions continuing to improve and mortgage interest rates close to all-time lows,” he explained.
“Nevertheless, the pace of housing market activity has remained subdued, with the number of mortgages approved for house purchase in January around 20 per cent below the level prevailing one year ago.”
Mr Gardner said that whilst house price growth has moderated across the UK, there is still significant regional variation, with London and the south both seeing the strongest rates of annual growth, although there was a noticeable softening in the capital.
“Price growth also continued to cool in the north west of England, Scotland and Wales, even though prices in these regions remain some way below their 2007 peak. Indeed, in annual terms, prices in Wales declined by 0.5 per cent in Q1.”
However, he warned that there has only been a modest pickup in house building after the sharp fall seen in the wake of the financial crisis.
“For example, in 2014 around 119,000 houses were built in England. This is 11 per cent higher than the low point seen in 2010, but 25 per cent below the average rate of building in the five years before the financial crisis.
“Moreover, official estimates suggest that even before the crisis, building activity was running below that required to keep up with the natural growth in the population.
Mr Gardner added that demand prospects remain favourable thanks to the strength of the labour market, continued low mortgage rates and schemes such as Help to Buy, which are helping to provide those with smaller deposits access to mortgage finance.
“This in turn should help to provide house builders with confidence that there will be demand from buyers if the homes are built.”
ruth.gillbe@ft.com
