The Consumer Confidence Index fell by nine points in March, wiping out all the increases that have been seen since the start of the year and representing the largest monthly fall in the index since July 2008.
Consumers now expect the value of their home to increase by 0.9% over the next six months, compared to 1.5% in February.
Martin Gahbauer, chief economist at Nationwide, says: “Two underlying factors that may have had some bearing on March’s figures are the chancellor’s Budget and the imminent general election.
“With an election looming, more people will be unsure as to whether they will be better or worse off in the coming months, and recent concerns about the state of the economy and employment prospects could still be playing on the minds of consumers.”
Gahbauer says that the fall in confidence is the similar drop in the run-up to the 2005 election where consumers seemed uncertain about the UK economy and unemployment.
But he adds that consumer pessimism appears to be stronger this time around.
He says: “While official figures show unemployment to be down, the labour market remains fragile and consumers understandably remain cautious.”