London is still the weakest performing region for house price growth at present, with prices down one per cent year-on-year.
According to the latest Nationwide house price index, UK annual house price growth remained subdued at 2.1 per cent in the year to March, cutting back slightly from the 2.2 per cent reported in February. That marked the lowest annual rate of growth since August last year.
House prices fell by 0.2 per cent over March - after taking account of seasonal factors - following a 0.4 per cent drop in February.
Subdued economic activity along with the ongoing squeeze on household budgets is expected to drag on both housing market activity and house price growth this year, according to Nationwide's chief economist.
Robert Gardner, Nationwide's chief economist, said:
On the surface, the relatively subdued pace of house price growth appears at odds with recent healthy rates of employment growth, a modest pick-up in wage growth and historically low borrowing costs.
However, consumer confidence has remained subdued, due to the ongoing squeeze on household finances as wage growth continues to lag behind increases in the cost of living.
He added that looking ahead "much will depend" on how broader economic conditions evolve - particularly in the labour market, but also on interest rates.
"Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year," he said.
“But historically low unemployment and mortgage interest rates together with the lack of properties on the market is likely to provide some support for house prices. Overall, we expect house prices to be broadly flat, with a marginal gain of around one per cent over the course of 2018."
Nationwide said home ownership rates had declined across all English regions over the past decade, but the biggest reduction has been in London, where the home ownership rate has fallen from 57 per cent to 47 per cent.
Some 30 per cent of households in the capital now rent.
Dr Howard Archer, EY Item Club's chief economic adviser, said:
Even if there was some negative impact on housing market activity and prices from the severe weather that hit the UK during March, this still points to a housing market struggling for momentum as activity is pressurized by still limited consumer purchasing power, fragile confidence and likely further gradual Bank of England interest rate rises following November’s first hike since 2007.
Archer said the year ahead looks set to be a difficult one for the housing market and expects price gains over the year to be limited to "a modest two per cent".