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London house prices hit hardest in subdued market

London house prices hit hardest in subdued market

House price growth in the UK remained subdued this month, with London witnessing the fastest pace in decline since 2009. 

According to the latest Nationwide house price index published today (March 29), house prices across the UK were 0.7 per cent higher in March compared with the same month last year, a performance the lender's chief economist described as "subdued". 

The market saw a 0.2 per cent price rise during the month, a modest rise from the flatlining in February. 

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The average house price in the UK sat at £213,102 in March, up form £211,304 in February. 

Robert Gardner, chief economist at Nationwide, said: "Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.

"Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have continued to decline, falling to their lowest level since 2008 in February."

Mr Gardner added: "While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months."

England recorded its first annual price fall since 2012 this month, with prices down 0.7 per cent in the quarter compared with Q1 2018, with London the weakest performing region in the first months of this year.  

The city witnessed the fastest pace of decline in house prices since 2009 and this was the seventh consecutive quarter in which prices dropped in the capital, with prices being 3.8 per cent lower in Q1 than the same period of 2018. 

Andrew Montlake, director of mortgage broker Coreco, said: "Prices in the capital may have declined at their fastest rate for a decade but after the outrageous gains of recent years and given the current chaos in Westminster it is an understandable drop.

"London is particularly sensitive to ongoing political uncertainty but it is also paying for the astronomic house price growth of five or six years ago."

Mr Montlake said the small increase in prices, both monthly and annual, highlighted how a lack of homes and broader supply deficit were propping the market up at a time of "great uncertainty".

He added: "A growing number of prospective buyers are concluding that the current volatility is not a time to put off a purchase but bring it forward as they hold all the cards and in recent weeks we've seen a marked pick-up in activity levels.

"While an absurd drama plays out in Westminster, many people are now getting on with their lives, buying property at strong discounts and making the most of the competitive mortgage rates still available."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "While one would expect housing market activity to spike in March as we move into the traditionally busy time of year for buying and selling a home, the fact that price growth, transactions and number of mortgages approved have managed to remain broadly stable is remarkable given the ongoing political situation.