UK house prices rose at their slowest pace in seven months in March, underscoring bruised consumer confidence, according to mortgage provider Nationwide.

Average prices rose by 2.1 per cent this month on an annual basis, which was down from a 2.2 per cent increase recorded in February and represented the lowest rise since August last year.

London was the weakest performing region, with house prices down 1 per cent compared with the same month a year ago, Nationwide said. The capital also remained the most expensive region. Home ownership in the city is now at 47 per cent, down from 57 per cent a decade ago.

“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,” said Robert Gardner, Nationwide’s chief economist.

“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.”

Looking ahead, Mr Gardner said that much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to 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.

Northern Ireland saw the strongest annual rate of growth, with a 7.9 per cent gain. But Nationwide also noted that, at 38 per cent, prices in the region are still furthest below their pre-crisis levels. Overall UK prices are 16 per cent above where they were in 2007.

The average price of a UK house is now £211,625, up from £210,402 in February.