"The pickup in house price growth suggests that the market had regained momentum after the slowdown recorded around the turn of the year"
- Robert Gardner - Nationwide
UK house price growth strengthened in March, with annual growth reaching 2.2%, up from 1.0% in February, according to the latest data released by Nationwide. Monthly prices rose by 0.9%, lifting the average property value to £277,186 from £273,176 the previous month.
The latest figures suggest a modest rebound after weaker activity around the turn of the year. However, wider economic pressures continue to shape expectations for the housing market.
"UK annual house price growth picked up to 2.2% in March, from 1.0% in February," said Robert Gardner, chief economist. "Prices increased by 0.9% month on month, after taking account of seasonal effects.
"The pickup in house price growth suggests that the market had regained momentum after the slowdown recorded around the turn of the year. However, the sharp rise in global energy prices in response to developments in the Middle East represents a significant shock to the global economy, clouding the outlook."
He pointed to growing uncertainty around inflation and interest rates, with markets shifting expectations in recent weeks.
"In the near term, UK economic growth is likely to be slower and inflation higher than previously expected, although ultimately the impact will depend on the duration of the shock as well as the policy response," he explained. "The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected.
"Nevertheless, financial market expectations for the future path of Bank Rate have shifted dramatically. Towards the end of March, three interest rate increases were priced in over the next twelve months, compared to two rate cuts being anticipated before the strikes on Iran. This shift has resulted in a sharp rise in longer-term interest rates (swap rates) that underpin fixed-rate mortgage pricing.
"If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years (see chart below). With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften."
Household resilience under pressure
Labour market conditions have eased in recent quarters, although employment levels remain relatively stable. Rising unemployment has largely reflected more people returning to the workforce rather than widespread job losses.
Gardner noted that household finances remain broadly resilient, supported by lower debt levels and accumulated savings.
"The labour market has cooled markedly in recent quarters, with the unemployment rate rising towards the peak seen during the pandemic," he said. "However, this has largely been driven by people re-entering the labour force, with employment levels holding up well.
"Moreover, in aggregate, household finances are solid, with household debt at its lowest level relative to income for two decades, and significant savings buffers accumulated in recent years (though these are not evenly distributed). Hopefully, this will help mitigate the additional pressures, though many are still recovering from the previous cost-of-living crisis.
"The vast majority of existing mortgage holders are protected from the immediate impact of higher interest rates, with c90% on fixed rate mortgages. Also, while swap rates have risen markedly, to date the increase is much less pronounced than that seen in the aftermath of the pandemic. Indeed, they are still at levels prevailing in late 2023 / early 2024 (as shown in the swap rate chart above)."
Regional performance remains uneven
Regional data for the first quarter shows a mixed picture, with most areas recording modest growth while a handful saw declines.
- Northern Ireland recorded the strongest annual growth at 9.5%
- Outer South East saw prices fall by 0.7% year-on-year
- East Anglia followed with a 0.4% annual decline
Gardner said most regions continued to post limited gains, with only two of the 13 areas registering annual falls.
"Our regional house price indices are produced quarterly, with data for Q1 (the three months to March) indicating that most regions saw modest annual house price growth," he said. "Two of the 13 regions saw annual price declines – the weakest performing region was Outer South East (-0.7% year-on-year), followed by East Anglia (-0.4%). In addition, another three regions recorded annual growth of less than 1% (West Midlands, East Midlands and the South West).
"At the other end of the spectrum, Northern Ireland continued to outpace the rest of the UK by a wide margin, with prices increasing by 9.5% over the year. This was more than six times faster than the 1.5% recorded in the UK as a whole (in Q1) and nearly three times higher than the 3.3% recorded in the next strongest region (North West). This strong performance mirrored that in the border regions of Ireland over the same period."
Across the devolved nations, Scotland and Wales both saw stronger growth compared with England.
"Scotland saw a pickup in annual house price growth in Q1 to 3.0%, from 1.9% in Q4 2025," he noted. "This was closely followed by Wales, where prices were up 2.7% year-on-year.
"England saw a further slowing in annual house price growth to 0.9%, from 1.2% in Q4. Average prices in Northern England (comprising North, North West, Yorkshire & The Humber, East Midlands and West Midlands) were up 1.5% year on year, with the North West (which includes areas such as Cheshire, Lancashire & Greater Manchester) remaining the top performing region in England – with prices up 3.3% year on year.
"Average house price growth in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) remained steady at 0.6%. London was the strongest southern region, with an annual price rise of 1.7%, up from 0.7% last quarter. Meanwhile, as noted above, East Anglia and the Outer South East both saw small annual declines."
Detached homes lead price growth
Property type data shows detached homes recorded the strongest annual growth, while flats continued to lag behind.
- Detached homes rose by 2.4% year-on-year
- Terraced properties increased by 2.1%
- Flats fell by 0.5% over the same period
"Our most recent data by property type shows that detached properties saw the biggest percentage rise over the last 12 months, with average prices up 2.4% year on year," he said. "Terraced properties saw similar growth of 2.1%, with semi-detached slightly weaker at 1.5%. However, flats saw a small year-on-year decline of 0.5%.
"Looking over the longer term, flats have seen noticeably weaker growth than other property types. For example, since the start of 2020, the price of a typical flat has increased by 15%, half the rise in the price of detached houses, which saw a 30% rise over the same period. This is partly a reflection of regional trends where London, which has a much greater proportion of flats, has underperformed the wider UK."
Tom Bill, head of UK residential research at Knight Frank, said, “The impact from the Middle East conflict on the housing market is still in the post. The fact that mortgage offers last for six months means the effect of higher borrowing costs will filter into the market this spring and summer, putting pressure on prices and transaction volumes downwards. The longer-term impact hinges on the intensity and length of the conflict. That said, one mitigating factor is the amount of equity in the system and the fact that more homes are now owned outright than with a mortgage.”
Nathan Emerson, CEO of Propertymark, comments, “An uplift in house prices will be welcomed by the market and suggests that buyer demand remains resilient despite ongoing economic headwinds. Improved sentiment, coupled with marginally better affordability conditions earlier in the year, appears to be supporting price growth.
“However, this upward movement must be viewed in context. Affordability remains stretched by historical standards, and any renewed pressure on inflation that may also affect base rate decisions could quickly temper this momentum.
“For now, it’s a positive sign that confidence is returning, but sustained growth will depend on stability in borrowing costs and a consistent flow of motivated buyers entering the market.”
