Residential property prices fell by 0.2% between February and March 2021, according to the latest Nationwide house price index.

Annual house price growth slowed to 5.7% in March, from 6.9% in February.

Northern Ireland recorded the greatest growth among the home nations, with a 7.4% increase, while Wales and Scotland both saw annual price growth of 7.2% and 6.9% respectively.

England was the weakest performing home nation in the first quarter of the year, with annual property price growth of 6.4%. But while prices dipped quarter-on-quarter, prices did rise on an annual basis – by a rate of 6.9%.

The North West performed best on a regional basis, with prices up 8.2% year-on-year – this is the strongest price growth seen in the region for six years and average prices reached a record high of £181,999.

The north of England also performed well, with prices up 7.2% compared with March last year.

London was the weakest performing region, with annual price growth falling to 4.8%, from 6.2% in the final quarter of last year.

Robert Gardner, Nationwide’s chief economist, commented: “Annual house price growth slowed to 5.7% in March, from 6.9% in February. Prices fell by 0.2% month-on-month, after taking account of seasonal effects, following a 0.7% rise in February.

“Given that the wider economy and the labour market has performed better than expected in recent months, the slowdown in March probably reflects a softening of demand ahead of the original end of the stamp duty holiday before the Chancellor announced the extension in the Budget.

“Recent signs of economic resilience and the stimulus measures announced in the Budget, including the extension of the furlough scheme and the stamp duty holiday, as well as the introduction of a mortgage guarantee scheme, suggest that housing market activity is likely to remain buoyant over the next six months.

“The longer-term outlook remains highly uncertain. It may be that the recovery continues to gather momentum and that shifts in housing demand resulting from the pandemic continue to lift the market. However, if the labour market weakens towards the end of the year as policy support is withdrawn, as most analysts expect, then activity is likely to slow nearer the end of 2021, perhaps sharply.”

Also reflecting on the data, Lucy Pendleton, at estate agents James Pendleton, said: “There is no stopping this sellers’ market at the moment. The pace of activity jumped once the schools went back and the weather began to improve, and the annual rate of growth shows this market still has the turbos on.

“Offers are flying in and discounts on asking prices are almost non-existent in London, which has been underperforming the regions in terms of annual house price growth recently. The capital may have been the worst performing region in the first quarter but it’s at the back of a very fast moving pack.

“The intensity that we’re experiencing now on the doorstep doesn’t feel like a match for anything we’ve seen since the financial crisis, and there’s nothing standing in the way of this energetic performance continuing. Long-term economic concerns are still secondary for buyers and, even if unemployment rises, it won’t affect everyone and will take time to bite into the housing market.

“The only losers currently are first-time buyers but even they are still able to access relatively cheap borrowing. Lending criteria have loosened considerably since last summer but it is unfortunate that any benefit from the stamp duty holiday has been rudely swallowed up by price increases, and that’s been true for a while.

“Plenty of people will have been waiting for the busy spring period to get going before listing their home and beginning their search, so fierce bidding is set to continue as the full force of the spring rush to market takes effect.”

Nicky Stevenson, managing director at national estate agent group Fine & Country, commented: “House price growth has touched the brakes but the market is set to be racing ahead again in the coming months with tax breaks, low rates and a stampede for more space forcing buyers to chase the market.

“Despite a slight softening in the growth rate in March, this is still the eighth record high for average prices since July, as valuations hammer away at the ceiling of what is possible in these unique market conditions.

“This week’s mini-heatwave is a reminder of the power of better weather which is expected to take activity up another gear over the next few weeks and beyond. The sunny surge that we see every year brings more property to market in April. Gardens start to look better and homeowners can gear up for a desirable summer move.

“Surging activity could last even longer this year though, with even the traditional summer slowdown in doubt. The market normally catches its breath over July and August as people go on holiday but there’s no guarantee getaways will be possible this year. That could propel house hunting from a national obsession into a national pastime.

“Larger properties are still driving the lion’s share of price increases. These homes feel the least benefit from the stamp duty holiday so it is still the pandemic and the need for more space, rather than tax breaks, that are the authors of this buoyant market.”

Jeremy Leaf, north London estate agent, said: “These figures reflect a market pause as many decided meeting the original stamp duty deadline at the end of March would be almost impossible, mainly due to the backlog. However, the announcement of the holiday extension and rapid rollout of the vaccine have acted like a shot in the arm and reenergised many, especially those new to the market. This is underpinned by a shortage of available properties even though stock levels have increased lately as owner confidence to invite visitors to their homes has improved.