Annual house price growth rose to 2.2% in March, up from 1.0% in February, according to the latest Nationwide House Price Index, as the average UK property value reached £277,186.
On a monthly basis, prices increased by 0.9%, suggesting a degree of renewed momentum following a softer start to the year.
However, the regional picture remains mixed. Northern Ireland recorded the strongest performance in the first quarter of 2026, with prices rising 9.5% year-on-year, while the Outer South East was the weakest performing area, with prices falling by 0.7% over the same period.
MARKET MOMENTUM RETURNS — BUT RISKS BUILD
Robert Gardner, chief economist at Nationwide, 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.
“Nevertheless, financial market expectations for the future path of Bank Rate have shifted dramatically.”
“Towards the end of March, three interest rate increases were priced in over the next twelve months, compared to two rate cuts being anticipated before the strikes on Iran.
“This shift has resulted in a sharp rise in longer term interest rates (swap rates) that underpin fixed rate mortgage pricing.
“If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years.
“With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften.”
GOVERNMENT HELP NEEDED
Tomer Aboody, director of MT Finance, said: “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.”
ACTIVITY WAS WARMING UP
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “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.”
MIDDLE EAST IMPACT IN THE POST
Tom Bill, head of UK residential research at Knight Frank, said: “The impact from the Middle East conflict on the housing market is still in the post.
“The fact mortgage offers last for six months means the effect of higher borrowing costs will filter into the market this spring and summer, putting downwards pressure on prices and transaction volumes.
“The longer-term impact hinges on the intensity and length of the conflict. That said, one mitigating factor is the amount of equity in the system and the fact more homes are now owned outright than with a mortgage.”
AFFORDABILITY IMPACT
Karen Noye, mortgage spokesperson at Quilter, said: “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.”
BORROWERS MOVE EARLY AS RATES RISE
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “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% 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.”
