UK house price growth strengthened in March, with Nationwide reporting that annual growth rose to 2.2% in March, up from 1.0% in February. The figures suggest the market regained some momentum after a slower start to the year, but a sharp shift in mortgage rate expectations and rising global uncertainty are already beginning to reshape the outlook.
Property experts are now assessing whether this rebound can be sustained as affordability pressures re-emerge.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:
“UK annual house price growth picked up to 2.2% in March, from 1.0% in February. Prices increased by 0.9% month on month, after taking account of seasonal effects.
The pickup in house price growth suggests that the market had regained momentum after the slowdown recorded around the turn of the year. However, the sharp rise in global energy prices in response to developments in the Middle East represents a significant shock to the global economy, clouding the outlook.
In the near term, UK economic growth is likely to be slower and inflation higher than previously expected, although ultimately the impact will depend on the duration of the shock as well as the policy response. The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected.”
Karen Noye, mortgage expert at Quilter:
“Nationwide’s latest house price index reveals modest movement in March, with house prices rising by 0.9% over the month and 2.2% annually, bringing the average UK house price to £277,186.
Today’s figures capture the early stages of the repricing that has taken place in mortgage markets since the start of the Iranian conflict. While some resilience in house prices appears to have remained for now, momentum will likely soften in the months ahead as higher mortgage rates and increased economic uncertainty weigh on buyer confidence.
Expectations of easing borrowing costs and gradually improving affordability had been supporting activity at the start of the year, but any real progress has been rapidly undone in the last month. Since the start of the conflict, mortgage rates have risen sharply and lenders have been withdrawing products or repricing fixed rate deals at short notice. For prospective home buyers and movers, this has meant a rapid deterioration in affordability.
First time buyers are likely to feel this most acutely, given their sensitivity to changes in rates and stress testing, but it also risks dampening activity further up the chain as existing homeowners delay moving plans in the face of higher borrowing costs. The full effect of higher borrowing costs, weaker confidence and tighter household budgets will take time to feed through, but we can expect the housing market to be stuck in a holding pattern unless anything changes soon.
For those with mortgages due to renew later this year, it is vital to act early. Securing a new deal as soon as possible can provide certainty at a time when rates are moving quickly, and borrowers are usually able to amend or switch to a cheaper option if pricing improves before their existing deal ends.”
Nathan Emerson, CEO of Propertymark, comments:
“An uplift in house prices will be welcomed by the market and suggests that buyer demand remains resilient despite ongoing economic headwinds. Improved sentiment, coupled with marginally better affordability conditions earlier in the year, appears to be supporting price growth.
However, this upward movement must be viewed in context. Affordability remains stretched by historical standards, and any renewed pressure on inflation that may also affect base rate decisions could quickly temper this momentum.
For now, it’s a positive sign that confidence is returning, but sustained growth will depend on stability in borrowing costs and a consistent flow of motivated buyers entering the market.”
Daniel Austin, CEO and co-founder at ASK Partners, said:
“Today’s rise in UK house prices points to underlying resilience, but momentum remains constrained by affordability pressures and a ‘higher for longer’ interest rate environment. While recent rate cuts signal easing inflation, they are unlikely to materially shift market dynamics in the near term. Mortgage pricing has improved at the margin, yet buyer and developer confidence remains fragile, particularly following a Budget that offered limited direct support for housing.
“At the same time, markets are beginning to factor in the potential downstream impact of the Iran conflict. While not yet fully reflected in headline inflation, it is widely expected to exert upward pressure on costs. This uncertainty is already feeding into lending conditions, with close to 1,000 mortgage products reportedly withdrawn since the onset of the conflict, further weighing on buyer activity. As a result, the market is being shaped more by structural than cyclical forces.
The UK’s relative economic resilience, including forecast growth of around 1.4% and sustained interest from Gulf and Southeast Asian capital, is supporting long-term confidence. In the near term, however, demand is shifting towards structurally undersupplied, income-driven sectors, particularly build-to-rent and co-living in well-connected suburban and commuter locations, alongside logistics, data centres and self-storage.
“While proposed planning and affordable housing reforms may improve scheme viability at the margin, elevated construction and financing costs continue to weigh on delivery. A clearer and sustained decline in inflation, and, in turn, interest rates towards the 3.5% range, will be the key catalyst for unlocking stalled development. Until then, capital is likely to remain focused on resilient, income-generating segments. Real estate debt, in particular, stands out as an attractive route to secure returns while maintaining downside protection in a still cautious and evolving market landscape.”
Nicky Stevenson, Managing Director at Fine & Country, comments:
“These figures show a strong sign that the spring market is waking up, and it couldn’t come at a better time for the industry.
A sustainable monthly rise in March and annual growth picking up by just over 2% suggests buyers have returned with more intent after the slower start to the year, and that confidence is improving in a measured way.
March is often when momentum properly builds. The longer days and the run-up to Easter tend to spur movers into action, and we typically see more households pressing ahead with decisions that were paused during winter. This uplift reflects that seasonal shift, alongside a market that has been steadily regaining pace.
That said, the picture remains highly local. Northern Ireland continues to outperform, while some parts of southern England are still softer. This is exactly why national headlines only ever tell part of the story. In many areas, the best-priced homes are attracting real interest, while others are taking longer as buyers stay value-focused and compare their options.
It’s also worth keeping an eye on the wider economic backdrop. The recent jump in global energy prices might be clouding the outlook, with expectations changing for interest rate decisions and longer-term mortgage pricing. However, we are still seeing a market that can move forward when buyers and sellers are realistic, and there are currently no warning signs that a significant adjustment in house prices is on the horizon.
“Overall, this is an encouraging set of figures for March. If mortgage pricing remains broadly stable, we would expect activity to stay solid through spring, supported by buyers who have been waiting for a clearer sense of direction and are now ready to act.”
Jason Tebb, President of OnTheMarket, comments:
“This data shows just how much market activity and sentiment continued to pick up at the start of this year, with buyers and sellers proceeding with their moves with more clarity and confidence.
While interest rate rises, rather than previously-expected reductions, seem increasingly likely depending on inflationary pressures, six interest rate cuts in the past 20 months have greatly assisted affordability and put borrowers in a stronger position.
Those who have already delayed the decision to move for various reasons are actively engaged in the market and are pressing on despite the Middle East conflict, with our own property sentiment index showing that buyers and sellers are adopting a more pragmatic outlook rather than a loss of confidence.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says:
“Although always a very useful snapshot of house prices from the UK’s largest building society, the data here mostly covers the period before Middle East hostilities emerged.
In the month or so immediately proceeding, activity had been warming up quite promisingly. Now that the conflict has continued for longer than originally anticipated, some doubts are starting to creep in over mortgage costs and inflation in particular.
However, the overwhelming majority of previously-agreed sales are continuing but new business is taking longer to negotiate.”
Tomer Aboody, director of specialist lender MT Finance, says:
“A period of lower mortgage rates, combined with a lack of patience and eagerness to get deals done after inertia in the run-up to the Budget, saw activity and transactions pick up at the start of this year.
“The housing market is vital to the UK economy, and reassuringly, even through tough times buyers and sellers have maintained activity, albeit at a lower intensity. However, if transaction levels are to be boosted from relatively low levels, the government must offer some incentive to help encourage activity.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says:
“The property market continues to demonstrate resilience despite a backdrop of global uncertainty.
The Middle East conflict has contributed to increased caution across financial markets. Mortgage rates have already edged upwards in response, and this is naturally becoming a talking point among applicants.
We are seeing a slight softening in viewing numbers as some buyers pause to assess the situation; however, the underlying market remains robust. Serious buyers are still very much active, with second viewings continuing and sales being agreed at levels typical for this time of year. While there is greater awareness of cost, for the right property, committed buyers are continuing to move forward with confidence.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
“Mortgage rates continue to rise as lenders deal with volatile funding costs and demand from borrowers for the most competitively-priced deals.
We have seen a significant increase in enquiries from those due to take out a mortgage in the coming months, with many wisely securing a rate now for peace of mind in case they rise further.
“With the Bank of England voting to keep rates at 3.75 per cent this month, a further hold next month rather than a knee-jerk reaction to raise rates would help steady the ship until we have a clearer idea of how long the war might last.”
