House prices fell in March by 1%, according to Halifax, with the average UK home now costing £2,900 less than in February.
The mortgage lender’s latest index showed over the last year house prices had grown by only 0.3% which is well below the 1.6% growth experienced in February.
It means a typical UK home now costs £288,430, said Halifax.
Kim Kinnaird, director, Halifax Mortgages, said: “That a monthly fall should occur following five consecutive months of growth is not entirely unexpected, particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022.
“Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.
“Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates.
“This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
The data comes just days after Nationwide’s house price index also showed a slowdown. It showed a 0.2% drop in house prices in March but over the last year it reported growth of 1.6%.
Karen Noye, mortgage expert at Quilter explained the the UK housing market was currently ‘navigating through a phase of cautious recovery’ and this would be characterised by the occasional drop in prices.
She said the recent volatility in mortgage prices had not helped.
“The dynamics of the mortgage market have played a pivotal role in shaping the current state of the property market,” she explained.
“Initial cuts in mortgage rates sparked a renewed interest among potential buyers and movers, who had previously adopted a wait-and-see approach due to the financial uncertainties of 2023. However, the subsequent slowdown in rate reductions by lenders has served to keep property price rises in check.
“Looking ahead, the anticipation surrounding the Bank of England’s monetary policy decisions will have its own like positive impact on the market. With expectations leaning towards a reduction in interest rates in the not-too-distant future, there’s a sense of optimism about the market’s direction.”
