Nationwide’s House Price Index recorded 0.9% month-on-month growth in March, marginally higher than the 0.3% monthly growth seen in February.
The pick-up in house price growth, said Robert Gardner, Nationwide’s chief economist, depicts a market that had regained its momentum after the slowdown recorded at the turn of the year. Housing market activity is likely to soften, however, if swap rates remain higher for longer, subsequently weighing down on borrowers’ ability to afford a mortgage.
Regional performance
Northern Ireland was the best performing area in Q1, recording a 9.5% rise in property values, while the outer parts of the South East performed weakest, as house prices were 0.7% down year-on-year.
East Anglia also saw a fall in house prices of 0.4%, while the West and East Midlands and the South West all recorded growth of less than 1%.
Finding opportunity in your local first-time buyer market
Sponsored by Pepper Money
House price inflation in Northern Ireland 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 North West, the next-strongest region.
Scotland saw a pick-up in annual house price growth in Q1 to 3%, up from 1.9% in Q4 2025. This was closely followed by Wales, where prices were up 2.7% year-on-year.
Uncertain outlook
UK economic growth is likely to be slower and inflation higher than previously expected in the near term, said Gardner. The impact, he said, would depend on how long the conflict in the Middle East lasted and the policy responses that ensued.
He added: “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 12 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… and [with] the prospect of rising energy costs, housing market activity is likely to soften.”
Household resilience
Gardner said household finances on the whole were “solid”. Household debt is at its lowest level relative to income for two decades, with accumulated savings acting as a buffer.
He added: “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 [around] 90% 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.”
