The pace of annual house price growth has accelerated to 14.3% in March, according to the latest Nationwide House Price Index.

This figure was an increase from the 12.6% annual growth that Nationwide reported in February, the strongest pace of increase since November 2004.

Prices also climbed by 1.1% month-on-month in March after taking account of seasonal effects, registering the eighth consecutive monthly increase.

Nationwide confirmed the figures mean the average price of a UK home has climbed to a new record high of £265,312, with prices increasing by over £33,000 in the past year. Prices are now 21% higher than before the pandemic struck in early 2020.

“The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs,” commented Nationwide chief economist, Robert Gardner.

“The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

“The continued buoyancy of housing demand may in part be explained by strong labour market conditions. The unemployment rate has continued to trend down in recent months, to 3.9% in the three months to January, from already low levels. Wage growth has accelerated, though it is running below inflation.”

Gardner added that he expects housing market activity to slow in the quarters ahead.

He continued: “The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.

“Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

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