Modest price growth still expected this year
UK house prices fell by 0.5% in March, equating to a monthly decrease of £1,575, according to new figures from Halifax.
Despite the drop, the annual rate of house price growth remained unchanged at 2.8%. The average home now carries a price tag of £296,699, the mortgage lender said on Monday.
Amanda Bryden (pictured centre), head of mortgages at Halifax, linked the recent price dip to a slowdown in buyer activity following a surge earlier in the year.
“House prices rose in January as buyers rushed to beat the March stamp duty deadline,” she said. “However, with those deals now completing, demand is returning to normal and new applications slowing.
“Our customers completed more house sales in March than in January and February combined, including the busiest single day on record. Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.”
Also commenting on the latest Halifax House Price Index, Nathan Emerson (pictured left), chief executive of industry body Propertymark, said the monthly decline may be discouraging for some vendors but could offer opportunities for prospective buyers.
“The spring and summer months normally spur on a flurry in housing activity, especially at a time when there are many competitive mortgage deals out there right now as a result of the reduction in interest rates last year,” he added.
“However, with housing playing a vital role in the UK economy, international events could jeopardise the Bank of England’s target of a 2%, which may thwart their ambitions to reduce interest rates further. The housing market must remain stable ahead of the Bank of England’s next decision on interest rates in May.”
Jonathan Samuels (pictured right), chief executive of specialist property lender Octane Capital, however, pointed to improving market sentiment and resilient demand.
“We’ve seen considerable improvements to the mortgage landscape over the last 12 months and this has driven a heightened degree of buyer activity, which in turn, has ensured that house price growth has remained strong and stable, with property values up on both a quarterly and annual basis,” he said.
“This positive rate of appreciation has come despite the wider economic headwinds blowing in from the United States and elsewhere around the world, with the expectation being that the UK property market will continue to march forward undeterred.”
Bryden, meanwhile, stressed that while borrowing costs, limited supply, and economic uncertainty remain headwinds for the housing market, the outlook could gradually improve.
“Looking ahead, potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and an uncertain economic outlook,” she said. “However, with further base rate cuts anticipated alongside positive wage growth, mortgage affordability should continue to improve gradually, and therefore we still expect a modest rise in house prices this year.”
Regional breakdown
At a regional level, Northern Ireland posted the strongest annual increase in property values, with prices climbing 6.6% year-on-year to an average of £206,620.
Scotland saw the second highest rate of growth, with annual price gains accelerating from 3.8% in February to 4.3% in March. The average home north of the border now costs £213,750. In Wales, prices rose 3.7% annually, reaching an average of £227,332.
Among English regions, Yorkshire and the Humber recorded a 4.2% annual increase, with average prices now at £215,807.
London continued to lag other regions, with annual price growth softening from 1.5% in February to 1.1% in March. Nevertheless, the capital remains the UK’s most expensive market, with an average property price of £543,370.
Any thoughts on the latest Halifax House Price Index? Share them with us by leaving a comment in the discussion box at the bottom of the page.
