House prices fell for the seventh consecutive month in March, down by -0.8%, according to Nationwide. Prices are now down -4.6% from their pre-mini-budget peak last August. At a regional level, only the South West saw value growth over Q1, up 0.3%. The next strongest was the East Midlands, down -0.9%. The largest falls were in East Anglia, down -3.1%.

Completed sales volumes held steady in February, down just -7% when compared to the pre-Covid average for the month. Completions are likely to fall further in the short term due to a small pipeline of agreed sales, and low levels of demand over the winter.

However, demand is slowly recovering, with new mortgage approvals rising to 33% below the pre-Covid average in February, up from 41% below in January. New instructions and sales agreed have risen more sharply, according to TwentyCi. Supply of homes on the market surged to 25% above the pre-Covid average in March. New sales agreed (a measure of demand) have recovered more slowly, now back in line with the pre-Covid level for the month.

The February RICS survey reported a similar pattern of greater levels of supply over demand. This all points to further falls in prices.

Demand is likely to continue to recover as mortgage interest rates fall, with some buyers currently holding off in the hope of securing a more attractive mortgage deal later on in the year. Borrowers have been keen to remain flexible while rates are still high, leading to a spike in January of variable rate mortgages. These comprised 10% of new lending according to UK Finance, up from just 3% of loans in 2022. Borrowers will be more willing to fix as rates stabilise over the next few months.

This will be supported by the availability of mortgage products, which has largely recovered to their levels prior to the mini-budget, a sign of increasing confidence from lenders. The exception is for 95% loan-to-value products, which remain scarce – likely a consequence of banks factoring in modest falls in home values.

Annual house price growth in December was strongest in Hastings and Torbay in Devon, up 18.1% and 16.7% respectively. Aberdeen continued to be the only place seeing annual price falls, down -3.7%. But these local measures of house price growth are lagged and are not yet picking up the most recent three months of house price falls.

Annual rental growth across the UK continued to slow in February, with rents up 10.9% from this time last year, slowing from a peak of 12% in July 2022. The rate of growth is mixed across regions, with some such as London and the South East decelerating on an annual basis, while the North East, Wales and Scotland have seen increasing annual growth rates, according to Zoopla.

Despite slowing for the seventh consecutive month, annual rental growth in London was still 14.9% in February. Excess tenant demand still outweighs a shortage of supply to make it the region with the highest rental growth. However, when compared to start of the pandemic in March 2020, its growth of 19.6% still lags behind the UK rate of 20.9% during the same period.