House prices fell by 3.1% year-on-year in March, marking the biggest annual decline since July 2009, Nationwide Building Society said.
Prices were down 0.8% in March, a bigger drop than the 0.5% seen in February, leaving the average UK house price at £257,122.
UK house prices fell at the sharpest rate in 14 years after surging interest rates increased the cost of borrowing.
Robert Gardner, the building society's chief economist, said: "It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation.
"Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year."
All regions of the UK saw a slowing in price growth in the first three months of the year, with most seeing small year-on-year falls. The West Midlands was the strongest performing region, while Scotland remained the weakest.
Gardner said: "Scotland remained the weakest performing region with prices down 3.1% compared with a year ago, a sharp slowing from the 3.3% year-on-year increase the previous quarter.
"East Anglia, which was the strongest performing region last quarter, saw a significant slowdown, with prices falling 1.8% year-on-year, making it the weakest performing English region. The neighbouring Outer South East saw a 1.5% yearon-year decline, while London saw a 1.4% fall.”
London’s drop means that a property in the capital comes at an average price of £511,293
Another monthly fall in the Nationwide house price index.
Now down 6.1% non-seasonally adjusted and down 4.6% seasonally adjusted since its peak back in August https://t.co/rHtNEg3fUq
— Neal Hudson (@resi_analyst) March 31, 2023
Matthew Thompson, head of sales at Chestertons, said: “House hunters may not be seeing the drop in London property prices that they had hoped for.
“In March, the average price at which properties sold via our branches stood at £1.37m with neighbourhoods such as Putney, Fulham and Barnes being in particularly high demand with buyers."