UK annual house price growth picked up to 2.2% in March, from 1.0% in February, says the Nationwide.

Prices increased by 0.9% month on month, after taking account of seasonal effects.

Robert Gardner, chief economist at the lender, says: “The pickup in house price growth suggests that the market had regained momentum after the slowdown recorded around the turn of the year. 

“However, the sharp rise in global energy prices in response to developments in the Middle East represents a significant shock to the global economy, clouding the outlook.

“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.

“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 says that financial market expectations for the future path of Bank Rate have shifted dramatically.

“Towards the end of March, three interest rate increases were priced in over the next twelve months, compared to two rate cuts being anticipated before the strikes on Iran.

“This shift has resulted in a sharp rise in longer term interest rates (swap 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.”