Annual house price growth accelerated to 2.2% in the year to March, the latest Nationwide House Price Index has shown.

This was up from 1% that the building society reported for the 12 months to February.

House prices increased by 0.9% on a monthly basis in March to the leave average price of a UK home standing at £277,186.

Nationwide suggested the pickup house price growth suggests that the market had “regained momentum” after the slowdown recorded around the turn of the year.

However, the building society also noted that the recent sharp rise in global energy prices, in response to the conflict in the Middle East, represents a “significant shock to the global economy”, clouding the outlook for the UK’s housing market.

“In the near term, UK economic growth is likely to be slower and inflation higher than previously expected, although ultimately the impact will depend on the duration of the shock as well as the policy response,” Nationwide’s chief economist, Robert Gardner, said.

“The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected.”

Gardner added that financial market expectations for the future path of the central bank’s base rate have “shifted dramatically”.

“Towards the end of March, three interest rate increases were priced in over the next 12 months, compared to two rate cuts being anticipated before the strikes on Iran,” he added. “This shift has resulted in a sharp rise in longer term interest rates that underpin fixed rate mortgage pricing.

“If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years. With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften.”

---