House price growth has slowed to its lowest level in 12 years, says the latest Nationwide House Price Index.
The index reveals a 0.6% drop in house prices in March, compared to a 0.5% fall in February.
It also shows a slowdown in annual growth of house prices to 1.1% in March this year from 2.7% in March 2007.
Nationwide says the average price of a typical UK house in March was £179,110, compared to £179,358 in February.
Fionnuala Earley, chief economist for Nationwide, says: “House prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6% during the month, bringing the annual rate of house price growth down to 1.1% – its lowest rate since March 1996.
“A clear change in sentiment since the late summer has led to the sharp slowing in house price growth, even in the less volatile three-month on three-month series. Prices on this measure are now 1.5% lower than three months ago.”
She says the price of a typical house in the UK of £179,110 is only £2,027 more than this time last year.
But she adds that house prices are still 11% higher than two years ago and 47% higher than five years ago – the equivalent of a price rise of more than £30 per day for the last five years.
Earley claims the Bank of England’s Monetary Policy Committee has a difficult path to tread.
She adds: “Conditions in the financial markets became more difficult during March, making the MPC’s interest rate decisions no easier.”
She believes the MPC may bring forward a rate cut to next month.