British house prices were flat in the 12 months to March after recording a 1.7% increase in the year to February, according to data released by the Office for National Statistics on Wednesday.
The latest reading marked the weakest annual performance since the year to April 2024, reflecting a slowdown in the country’s housing market.
At the same time, average UK monthly private rents increased by 3.5% in the year to April, slightly higher than the 3.4% increase recorded in the 12 months to March.
The housing data came alongside fresh inflation figures showing that British consumer price inflation slowed to 2.8% in April from 3.3% in March.
The inflation reading was lower than market expectations.
Inflation eases more than expected
The decline in inflation was mainly attributed to the impact of last year’s increases in utility and other regulated prices dropping out of the annual comparison.
The latest figures suggested that price pressures moderated more sharply than expected during April.
However, the broader inflation outlook remains uncertain as policymakers continue to assess the impact of rising energy costs and geopolitical tensions on the British economy.
The latest economic data arrives at a time when households are still dealing with elevated living costs despite the slowdown in headline inflation.
The combination of weaker house price growth and easing inflation is likely to remain closely watched by financial markets and policymakers in the coming months.
Iran conflict complicates inflation outlook
Before the US-Israeli war on Iran began on February 28, the Bank of England had signalled that inflation in Britain was likely to remain close to its 2% target in April.
Britain has experienced some of the highest inflation levels among Group of Seven economies over much of the past four years.
However, the conflict and the resulting increase in energy prices have complicated the outlook for inflation and monetary policy.
The Bank of England has since sharply raised its inflation forecasts.
According to the central bank, inflation could rise as high as 6.2% early next year under its most inflationary scenario.
The warning has added to concerns about the potential impact of higher energy prices on businesses and consumers.
Policymakers remain under pressure
The renewed inflation risks have increased pressure on both policymakers and the government as households continue to face high costs across essential goods and services.
The latest inflation data may offer some short-term relief after coming in below economists’ expectations. However, uncertainty linked to global energy markets and geopolitical tensions continues to cloud the outlook.
Meanwhile, the housing market data highlighted ongoing weakness in property price growth, with annual house price gains disappearing entirely in March.
Private rents, however, continued to rise, suggesting ongoing pressure in the rental market despite the broader slowdown in house prices.
The Bank of England is expected to continue monitoring inflation trends and energy market developments closely as it evaluates the future path of monetary policy.
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