Growth in UK house prices slowed down in March, while the number of home owners tumbled to the lowest level in over 30 years, figures released by Nationwide showed.
According to the building society, house prices grew 3.5% year-on-year this month, slowing down from the 4.5% pace recorded in February and falling short of the forecast for a 4% increase. The rate of growth was the lowest in the last 19 months and added to economists’ forecast that price growth will moderate over 2017.
Meanwhile, Nationwide added that the latest English Housing Survey from DCLG revealed the home ownership rate hit its lowest level since 1985, dropping to 62.9% in 2016.
On a monthly basis, house prices suffered an unexpected slowdown in March, declining by 0.3%, compared with analysts’ expectations for a 0.3% increase and a 0.6% increase recorded in February.
However, while price growth slowed, the UK’s average house price, which is not seasonally adjusted, rose from £205,846 in February to £207,308 in March.
Robert Gardner, chief economist at Nationwide, said the report painted a mixed picture across Britain in the first three months of the year. Six regions saw house prices increase, while another six recorded a decline, and growth in the East Midlands remained unchanged.
“Interestingly, the spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8 percentage points – the second smallest gap on record,” he said.
Prices in the south of England grew slightly faster than in the north, while conditions remained subdued in Wales and Scotland, and Northern Ireland recorded a small uptick in growth.
“Nationwide’s index indicates that house prices are rising at their slowest year-over-year pace since August 2015, and the slowdown is corroborated by other timely indicators from Halifax and Rightmove,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
“Growth likely will continue to moderate as the pressure on households’ incomes from rising inflation intensifies and as employment growth remains weak.”
Earlier this week, the Bank of England reported a decline in mortgage approvals in February, which, coupled with the slowdown in growth in house prices, showed the squeeze on households’ budgets was beginning to make its presence felt in the housing market.
“Markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on housing market activity and house prices,” said Howard Archer, chief UK and European economist at IHS Markit.
“However, a shortage of supply is likely to put a floor under prices.”