House prices dropped 0.2% between February and March 2021

House prices dropped

The North West performed best, with prices up 8.2% YOY, which is the strongest price growth in the region since 2005

House prices dropped 0.2% between February and March 2021, according to the most recent Nationwide house price index.

Annual house price growth slowed to 5.7% in March, from 6.9% the month before.

Northern Ireland saw the highest growth among the four UK regions, with a 7.4% rise, while Wales and Scotland both saw a rise in annual price growth, to 7.2% and 6.9% respectively.

England was the weakest performing region in the three months to March 2021, with annual house price growth of 6.4% which represents a slight slowing compared with last quarter, however, when prices increased at an annual rate of 6.9%.

Regionally, the North West performed best, with prices up 8.2% year-on-year (YOY), which is the strongest price growth seen in the region since 2005 and average prices reached a record high of £181,999.

There was also a pick up in price growth in the North, which saw a 7.2% annual rise.

London was the weakest performing region, with annual price growth slowing down to 4.8%, from 6.2% in Q4 last year.

Robert Gardner, chief economist at Nationwide, said: Annual house price growth slowed to 5.7% in March, from 6.9% in February. Prices fell by 0.2% month-on-month, after taking account of seasonal effects, following a 0.7% rise in February.

Given that the wider economy and the labour market has performed better than expected in recent months, the slowdown in March probably reflects a softening of demand ahead of the original end of the stamp duty holiday before the Chancellor announced the extension in the Budget, he said.

Recent signs of economic resilience and the stimulus measures announced in the Budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggest that housing market activity is likely to remain buoyant over the next six months, Gardner said.

The longer-term outlook remains highly uncertain. It may be that the recovery continues to gather momentum and that shifts in housing demand resulting from the pandemic continue to lift the market, he said. However, if the labour market weakens towards the end of the year as policy support is withdrawn, as most analysts expect, then activity is likely to slow nearer the end of 2021, perhaps sharply.

He said that overall UK annual house price growth in Q1 was similar to Q4, although there was a mixed picture across the regions, with around half seeing a slowdown in growth.

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