British house prices surged in March, marking their fastest annual growth since December 2022, according to a survey released on Tuesday. The data underscores a continuing trend of easing

pressure from high interest rates.

Nationwide Building Society, one of the UK's leading mortgage lenders, reported that house prices climbed by 1.6% year-on-year in March, reaching an average of £261,142 ($328,229). This growth accelerated from a 1.2% increase recorded in February.

Despite a slight monthly decline of 0.2% in March – the first drop since December 2023, following a 0.7% rise the previous month – the annual growth rate surpassed economists' expectations. Analysts polled by Reuters had anticipated a 0.3% monthly increase on a seasonally adjusted basis and a stronger annual rise of 2.4%.

Nationwide economist Robert Gardner noted that while housing market activity has improved from the low levels seen at the end of 2023, it remains relatively subdued compared to historical norms. However, he pointed out that affordability constraints are gradually easing as house prices rise more slowly than wages, which have increased by around 6% over the past year.

Looking ahead, Rob Wood, chief UK economist at Pantheon Macroeconomics, forecasted a 4% rise in house prices for 2024. He cited ongoing indicators suggesting continued growth in house prices as mortgage rates gradually decline.

House prices in the UK surged by more than 20% in the aftermath of the COVID-19 pandemic until late 2022, but then experienced a slight downturn as home sales were affected by bond market volatility during Liz Truss' brief tenure as prime minister and a sharp uptick in interest rates.

The Bank of England raised its main interest rate to 5.25% in August 2023, the highest level since 2008. Financial markets anticipate the possibility of an initial rate cut in June or August, with rates expected to decrease to approximately 4.5% by year-end, thereby reducing the cost of new mortgages.

Figures released by the Bank of England on Tuesday revealed that lenders approved the highest number of mortgages since September 2022 in February. However, the latest figure of 60,383 approvals remains approximately 10% below the pre-COVID average.

Furthermore, the average interest rate on new mortgages declined by 0.29 percentage points in February to a six-month low of 4.90%.

For the first quarter of the year as a whole, house prices rose by 1.1% compared to the previous quarter, marking the fastest three-month increase since the period ending in July 2022, according to Nationwide.

Notably, Northern Ireland witnessed the most significant price growth over the past year, with prices increasing by 4.6%, while southwest England experienced the largest decline, with prices falling by 1.7%. Meanwhile, prices in London rose by 1.6%.