The traditional north-south divide on house prices has been turned on its head, with London the UK’s worst-performing region and north-west England topping the table, according to Nationwide.
The data follows numerous surveys reporting a surge in the numbers of people who have moved out of London and other urban areas, or are planning to do so, after concluding they will be able to work from home for at least part of the week in future.
The building society said that for the UK as a whole, prices dipped by 0.2% in March after taking account of seasonal factors, following a 0.7% rise in February.
It said this slowdown probably reflected a softening of demand ahead of the original end of the stamp duty holiday on 31 March before the chancellor, Rishi Sunak, announced in the budget that it would be extended until 30 June.
As a result, the rate of annual house price growth slowed to 5.7% in March, from 6.9% in February. This puts the average UK house price at £232,134.
Looking at the regions, Nationwide’s figures for the first three months of 2021 show London was the UK’s weakest performer, with annual price growth falling to 4.8%, down from 6.2% in the final quarter of 2020.
In the surrounding “outer metropolitan” region, which includes places such as Guildford, Crawley and Chelmsford – some of which have been popular with people looking to move out of London – price growth remained stable at 5.6%.
North-west England was the strongest-performing region, with prices up 8.2% year on year. This is the highest rate of price growth in the area since 2005 and average prices there have hit a record high of £181,999, said Nationwide. There was also a pickup in price growth in the neighbouring north region, with a 7.2% annual increase.
Despite the small fall in UK house prices in March, Robert Gardner, Nationwide’s chief economist, said recent signs of economic resilience and the stimulus measures announced in the budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggested market activity “is likely to remain buoyant over the next six months”.
Jonathan Hopper, the chief executive of the buying agent Garrington Property Finders, said there had been a “pause for breath” in the market after three months of national lockdown.
He added: “New regional hotspots are emerging ... Prices in north-west England are rising nearly twice as fast as those in London, with the capital the worst-performing region.”
Nicky Stevenson, the manager director of estate agents Fine & Country, said better weather in the coming weeks was expected to “take activity up another gear”, adding it was still the pandemic and the need for more space that were driving the market.