According to Nationwide’s latest house price index, the average house price in February came to £258,297, down from £258,297 in January.

The company added that the monthly price fall was the sixth in a row, leaving prices 3.7% below their August peak.

Robert Gardner, Nationwide’s chief economist, said that the “recent run of weak house price data” started from the financial market turbulence in response to the mini Budget.

He added that the financial market conditions have since stabilised but “housing market activity has remained subdued”.

Gardner said: “This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time. Indeed, inflation has continued to outpace wage growth and mortgage rates remain significantly higher than the lows recorded in 2021.”

He said that although consumer sentiment had improved in recent months, it was “still languishing at levels prevailing during the depths of the financial crisis”.

Mortgage rates will stay above lows of 2021

Gardner said that it would be “hard for the market to regain such momentum” in the near team as economic headwinds “look set to remain relatively strong”.

He pointed to the labour market weakening and that mortgage rates would “remain well above the lows of 2021”.

Gardner said that despite the modest fall in house prices, mortgage payments for prospective first-time buyers earning an average income are “well above the long run average of take-home pay”.

The deposit requirements are also “prohibitively high for many” and are a “struggle” due to the cost of living, especially for those in the private rented sector, he added.

Gardner continued that conditions would “gradually improve” if inflation moderated in the next few months as expected and eased pressure on household budgets.

Interest rates, energy hikes and inflation a ‘perfect storm’

Karen Noye, mortgage expert at Quilter, notes that the fall in prices could push the Government into making a move in the Spring Budget on 15 March.

Sahe said: “After not only surviving but thriving during the pandemic, inflation, higher energy costs and interest rate hikes are proving to be a perfect storm for house prices with them showing the first annual decline since June 2020 and the weakest growth in a decade.

“With the budget only a matter of days away, the Government may be looking at ways to prop up the housing market once again. However, any big giveaways must be weighed against a certain sense of inevitability that the housing market is due a correction after its huge increases during the pandemic.

“Any further intervention such as an increase in the stamp duty relief on offer or even some more radical options to persuade people into buying might only stabilise house prices for the short term.”

Buyers’ market ahead

Meanwhile, Myron Jobson, senior personal finance analyst, interactive investor, feels that new figures will hasten the shift to a buyers’ market.

He said: “The biggest annual fall in house prices in over a decade marks a significant psychological shift in the housing market favouring buyers who have been waiting in the sidelines because they haven’t been able to make the numbers work.

“The recent fall in house prices suggests that we are the cusp of seeing the sales market handing back purchasing power to buyers. Sellers are already accepting huge discounts on asking prices, £14,000 on average – according to Halifax’s recent study of the property market since the start of the Covid pandemic – to get sales over the line as the property market cools down.