As a result, the building society stated that the average house price in the UK reached £179,110.
Fionnuala Earley, chief economist at Nationwide, said: “House prices fell for the fifth consecutive month in March. The price of a typical house fell by 0.6 per cent during the month, bringing the annual rate of house price growth down to 1.1 per cent – its lowest rate since March 1996.
"A clear change in sentiment since the late Summer has led to the sharp slowing in house price growth.”
She added that confidence in the sector had waned as a result of the global liquidity crisis that had forced lenders to reassess their lending policies.
“The outlook for UK house prices is clearly more downbeat than at the time of our November forecast. Some of the risks we identified then have become a reality – most notably the continued turmoil in the financial markets.”
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, admitted that aspiring buyers would suffer in the current financial climate. He said:
“Lenders are continuing to respond to the worsening conditions in the money markets by raising the cost of mortgage loans and tightening up on lending criteria.
“This is making it even harder for first-time buyers to take their first step into the property market. There is little reason to believe that underlying problems facing mortgage lenders will ease anytime soon. As a result house prices are likely to continue to drift lower in the coming months.”
