Annual house price growth in the UK slowed to 5.7% in March, down from 6.9% in February, according to the latest Nationwide House Price Index.

The figures showed that prices also fell by 0.2% on a monthly basis, after taking account of seasonal effects.

Nationwide stated that the latest movement brought the average UK house price to £232,134 in March.

Commenting on the new figures, Nationwide chief economist, Robert Gardner, said: “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.”

Gardner also suggested that policy support is likely to boost housing market over the next six months, but warned that 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,” he said.

“However, if the labour market weakens towards the end of the year as policy support is withdrawn, as most analysts expect, then activity is likely to slow nearer the end of 2021, perhaps sharply.”

Director of independent mortgage broker Wallace Home Finance, Colin Wallace, suggested there is currently a “sense of optimism” about the housing market.

“While the threat of rising unemployment is obviously a concern, this is mitigated by the general public's desire to get back to how things were pre-pandemic,” he commented.

“A significant amount of spending is likely to happen as the year progresses and the property market should benefit from that. There’s a sense of optimism among borrowers, while lenders are beginning to show an appetite to lend to people with lower deposits, albeit at slightly higher interest rates.

“First-time buyers have been in hibernation as a result of lenders not offering higher loan-to-value products during 2020 but demand among this key group is growing as lenders start to once again offer more small deposit loans.”

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