The latest Nationwide House Price Index estimates that UK house prices are currently around 2% above their pre-crisis levels.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“Economic conditions have remained supportive, with labour market conditions continuing to improve and mortgage interest rates close to all-time lows. Nevertheless, the pace of housing market activity has remained subdued, with the number of mortgages approved for house purchase in January around 20% below the level prevailing one year ago.
“While house price growth has moderated across the UK, there is still significant regional variation. Prices in London and the South of England continued to see the strongest rates of annual growth, though there was a noticeable softening this quarter, particularly in London.
“Price growth also continued to cool in the North West of England, Scotland and Wales, even though prices in these regions remain some way below their 2007 peak. Indeed, in annual terms, prices in Wales declined by 0.5% in Q1."
Jonathan Hopper, managing director of buying agents Garrington Propert Finders, commented:
"These figures will make confusing reading to the man on the street, because although annual growth is slowing, strangely the monthly trend is upwards.
"In fact average house prices actually hit a record level of close to £190,000 in March, and there's nothing to suggest there's too much wrong with the market other than a level of normality returning to it.
"That's certainly the case in London, which was driving up average house prices this time last year, as buyers snapped up anything that came onto the market in a feeding frenzy for fear that prices would run away from them.
"On the ground, we are still seeing plenty of potential buyers viewing, the difference is that buyers are driving sales now rather than the other way around.
"And while house prices remain at such high levels, people are taking longer to find properties they want in their price range.
"For buyers who are commited to making a purchase, this market actually presents a genuine window of opportunity to pick up a bargain, because there will be sellers who are keen to sell before the General Election. But that window is closing fast - and once buyers have the clarity they need from the Election result, they will feel more confident to proceed, and it will be business as usual."
The index also highlighted that housing supply is increasingly slow to respond to the strong rates of house price growth in recent years. In 2014 around 119,000 houses were built in England, which is 11% higher than the low point seen in 2010, but 25% below the average rate of building in the five years before the financial crisis. Moreover, official estimates suggest that even before the crisis, building activity was running below that required to keep up with the natural growth in the population.
Robert Gardner added:
“Hopefully, construction activity will strengthen further in the period ahead. The major house builders appear to have capacity to expand supply, with most reporting land banks, which, at current rates of building activity, could support construction for more than five years. Demand prospects remain favourable thanks to the strength of the labour market, continued low mortgage rates and schemes such as Help to Buy, which are helping to provide those with smaller deposits access to mortgage finance. This in turn should help to provide house builders with confidence that there will be demand from buyers if the homes are built.
“The sluggish recovery in housebuilding in recent years reinforces the view that UK housing supply is slow to respond to price signals. However, there is some evidence that more building is taking place in regions where affordability is more stretched."
