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Nationwide: House prices drop 0.2% month-on-month

Jake Carter

March 31, 2021

House prices fell by 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 home nations, with a 7.4% increase, while Wales and Scotland both saw an acceleration in annual price growth, to 7.2% and 6.9% respectively.

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

Regionally, the North West performed best, with prices up 8.2% year-on-year – this 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 increase.

London was the weakest performing region, with annual price growth softening 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.

“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.

“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.

“However, if the labour market weakens towards the end of the year as policy support is withdrawn, as most analysts expect, then activity is likely to slow nearer the end of 2021, perhaps sharply.

“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.”

Tomer Aboody, director of MT Finance, said: “With the many uncertainties before the Budget given the possible end of the stamp duty holiday and furlough schemes, March’s housing market slowed down in anticipation of what Rishi Sunak might bring.
“With neither halted and both extended, the month was still buoyant, although slower than February.
“The continued shift in buyers’ demands for more space meant London saw the slowest growth with prices still very high compared to the rest of the country and space more limited.
“Gardens, communities, green spaces and easy commutes are increasing demand for the outer regions with prices continuing to rise to reflect this.

“While money is cheap and jobs are still being saved via the furlough scheme, we have yet to feel the full effect of the pandemic but as, and when, the furlough scheme and artificial stimulus in the economy come to an end, we can only assume that the job market and economy will suffer, which in turn will impact the housing market.

“In the meantime, buyers are making hay while the sun shines in spring.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These figures reflect a market pause as many decided meeting the original stamp duty deadline at the end of March would be almost impossible, mainly due to the backlog.
“However, the announcement of the holiday extension and rapid rollout of the vaccine have acted like a shot in the arm and reenergised many, especially those new to the market.
“This is underpinned by a shortage of available properties even though stock levels have increased lately as owner confidence to invite visitors to their homes has improved.
“Looking forward, we don’t expect too much change on the ground other than another rapid dash to take advantage of lower stamp duty for the higher-priced properties, particularly in places like London, before the end of June.”


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