According to Nationwide, the price of a typical house has increased by 0.4% from February to March 2007, bringing the annual rate of house price inflation back into single digits at 9.3% from 10.2%.

The average house price has risen from £174,706 to £177,083.

Fionnuala Earley, Nationwide’s chief economist, said: “While the annual rate of house price inflation has yo-yoed over the last few months, the underlying trend is clearly softening as interest rates take effect.”

Prices rose by an average of 1.1% in the last three months of 2006. Earley said: “Leading indicators of house price inflation also suggest that the underlying trend will continue to slow this year. Mortgage approvals and buyer enquiries at estate agents have weakened since the start of the year, and we expect that this will continue as the dampening effect of the earlier interest rate rises feed through.
“Our forecast of house price growth of 5-8% in 2007 still looks on track, and implies price rises averaging between 0.4% and 0.7% per month for the rest of the year.”