House prices in Britain rose at the slowest pace in seven months in March, mortgage lender Nationwide said on Thursday, adding to signs of fading momentum in the market.
House prices rose 2.1 percent in the year to March, weaker than all forecasts in a Reuters poll of economists that had pointed to growth of 2.6 percent and slowing from a 2.2 percent increase in February.
Prices fell on the month by 0.2 percent, following a 0.4 percent drop in February - again undercutting all forecasts in the Reuters poll that had pointed to growth of 0.2 percent.
“Housing market activity is expected to remain lacklustre as the extended squeeze on consumer purchasing power only gradually eases"
Britain’s housing market has been hit by a squeeze on household incomes caused by higher inflation after the Brexit vote in 2016 pushed down the value of the pound. Weak wage growth has added to the strain on many households while the overall economy has slowed.
“Housing market activity is expected to remain lacklustre as the extended squeeze on consumer purchasing power only gradually eases, confidence is fragile and appreciable caution persists over engaging in major transactions,” Howard Archer, economist at the EY ITEM Club, said.
“Potential house buyers also look highly likely to face further interest rate hikes over the coming months.”
Economists polled by Reuters expect the Bank of England to raise interest rates again in May to a new post-financial crisis high of 0.75 percent.
Nationwide said it expected house prices would be broadly flat over 2018, with a marginal gain of around 1 percent over the year as a whole.
Earlier this month, rival mortgage lender Halifax said house prices increased at their slowest annual pace in almost five years during February.