UK house price growth strengthened in March signalling a return of momentum to the housing market after a softer start to the year.
The latest index from Nationwide Building Society shows annual house price growth rose to 2.2% in March, up from 1.0% in February. On a monthly basis, prices increased by 0.9%, taking the average UK property value to £277,186.
The figures suggest the market has stabilised following a slowdown around the turn of the year, with modest price growth returning across most regions.
However, the outlook remains uncertain, with rising global energy prices and shifting interest rate expectations expected to weigh on affordability and activity in the months ahead.
PERFORMANCE DIVIDE
Regional data highlights a widening divide in performance. Northern Ireland was the strongest market in the first quarter of 2026, with prices rising by 9.5% year-on-year. In contrast, the Outer South East recorded a 0.7% annual decline, making it the weakest performing region.
Across England, price growth continued to slow, with annual increases of 0.9%, while Northern regions outperformed the South. The North West remained the strongest English region, with prices up 3.3% year-on-year.
In Southern England, growth remained subdued at 0.6%, although London saw a modest improvement, with annual price growth reaching 1.7%.
Property type data shows detached homes led annual growth, rising by 2.4%, followed by terraced properties at 2.1%. Flats were the only segment to see a decline, with prices falling by 0.5% year-on-year.
The data points to a market that is regaining its footing but remains sensitive to wider economic pressures, particularly borrowing costs and household confidence.
GOVERNMENT INCENTIVES
Tomer Aboody, director of specialist lender MT Finance, says: “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.”
DEVELOPER CONFIDENCE FRAGILE
Daniel Austin (main picture), CEO and co-founder at ASK Partners, says: “Today’s rise in UK house prices points to underlying resilience, but momentum remains constrained by affordability pressures and a ‘higher for longer’ interest rate environment. While recent rate cuts signal easing inflation, they are unlikely to materially shift market dynamics in the near term.
“Mortgage pricing has improved at the margin, yet buyer and developer confidence remains fragile, particularly following a Budget that offered limited direct support for housing.”
CONFLICT CONCERNS
And he adds: “At the same time, markets are beginning to factor in the potential downstream impact of the Iran conflict. While not yet fully reflected in headline inflation, it is widely expected to exert upward pressure on costs. This uncertainty is already feeding into lending conditions, with close to 1,000 mortgage products reportedly withdrawn since the onset of the conflict, further weighing on buyer activity.
“As a result, the market is being shaped more by structural than cyclical forces. The UK’s relative economic resilience, including forecast growth of around 1.4% and sustained interest from Gulf and Southeast Asian capital, is supporting long-term confidence.
“In the near term, however, demand is shifting towards structurally undersupplied, income-driven sectors, particularly build-to-rent and co-living in well-connected suburban and commuter locations, alongside logistics, data centres and self-storage.”
EVOLVING LANDSCAPE
And he says: “While proposed planning and affordable housing reforms may improve scheme viability at the margin, elevated construction and financing costs continue to weigh on delivery. A clearer and sustained decline in inflation, and, in turn, interest rates towards the 3.5% range, will be the key catalyst for unlocking stalled development. Until then, capital is likely to remain focused on resilient, income-generating segments.
“Real estate debt, in particular, stands out as an attractive route to secure returns while maintaining downside protection in a still cautious and evolving market landscape.”
