The annual rate of house price growth is at its lowest rate since March 1996, according to Nationwide.
Its house price survey shows that house prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6 per cent during the month, bringing the annual rate of house price growth down to 1.1 per cent.
Nationwide economist Fionnuala Earley says: “A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, even in the less volatile 3-month on 3-month series. Prices on this measure are now 1.5 per cent lower than three months ago.”
The price of a typical house in the UK is now £179,110, only £2,027 more than this time last year.
But Earley points out that prices are still 11 per cent higher than two years ago and 47 per cent higher than five years ago – the equivalent of a price rise of more than £30 per day for the last five years.
Earley also believes the MPC may look to bring forward its rate cut to April due to the collapse of Bear Stearns and the fallout from false rumours of problems in HBOS.
Nationwide has also reassessed its outlook for the housing market. It says the outlook for UK house prices is clearly more downbeat than at the time of its November forecast.
It says that some of the downside risks it identified have become a reality.
Earley says: “However, the path for house prices in 2008 still looks set to remain within our forecast range. We expect a modest fall in house prices during the year, but such a fall should be seen in context. If prices were to fall in line with consumers’ expectations, they would still be higher than two years ago. A moderate fall in prices at this stage should not be unwelcome and should help to ensure greater stability in the market going forward.”