British house price inflation slowed in March, suggesting higher borrowing costs are taking their toll on the property market, mortgage lender Nationwide said today.
Nationwide said house prices rose 0.4 per cent this month compared with a downwardly revised increase of 0.6 per cent in February.
That took the annual rate of house price inflation down to 9.3 per cent in March from 10.2 per cent. The average house price stood at £177,083.
The figures suggest that 18 months of robust house price growth may be nearing an end as homebuyers feel the impact of three rises in interest rates by the Bank of England.
BoE Governor Mervyn King said yesterday there were signs the housing market was starting to slow and data from the British Bankers Association yesterday showed approvals for home loans - a leading indicator of house prices - were 5 per cent lower in February than a year ago.
"Mortgage approvals and buyer enquiries at estate agents have weakened since the start of the year and we expect that this will continue as the dampening effect of the earlier interest rate rises feel through," said Nationwide chief economist Fionnuala Earley.
Nationwide said house prices had risen by an average 0.4 per cent in the first three months of this year, less than half the 1.1 per cent growth witnessed in the final quarter of 2006.
But it said tight housing supply should help support prices even though demand was cooling and that its forecast for house price growth of 5-8 per cent this year looks on track.