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 Englands Monetary Policy Committee has a difficult path to tread.
She adds: Conditions in the financial markets became more difficult during March, making the MPCs interest rate decisions no easier.
She believes the MPC may bring forward a rate cut to next month.