House prices rose by a surprising 0.7 per cent in March, reversing much of the previous month's fall in prices, according to Nationwide building society. The expectation had been that the end of the mini-boom and the stamp duty holiday at the end of last year would keep prices falling.
Observers said the price rise was probably due to a failure of supply to keep pace with demand, especially in London and the South-east. The slow market also appears to be deterring some vendors from putting their homes on the market, while the continuing shortage of mortgage finance is still a problem, especially for first-time buyers. On the demand side, there is some anecdotal evidence of opportunistic buying by those with large deposits and by foreign investors taking advantage of the fall in sterling.
Nationwide also pointed to a moderation in the annual rate of house price inflation, down from 9.2 per cent in the year to February to 9 per cent in the 12 months to March. The average property value stands at £164,519.
Martin Gahbauer, the chief economist at Nationwide, warned: "The last two months are consistent with a relatively flat profile for house prices... Preliminary figures show that the number of loans taken out for house purchases failed to recover from January's large dip, suggesting that weakness in house sales at the start of the year may have been due to more than just the snowy weather."
Greater London maintained its position as the best-performing region, with prices up by a seasonally adjusted 2.5 per cent in the quarter, said Nationwide. The slowest market, Northern Ireland, was down 3 per cent.Reuse content