Property prices fell in March, reflecting the first monthly fall since September 2023, according to the latest figures from Halifax.
The major mortgage lender revealed the average home price fell 1 per cent last month, following five consecutive months of rises.
Halifax says the typical home now costs £288,430, which is around £2,900 less than February.
The latest fall means that annually, average house prices are effectively flat, inching 0.3 per cent higher compared to this time last year.
March dip: Compared to last month, the price of a UK property fell 1 per cent or £2,908 in cash terms, with the average property now costing £288,430, according to Halifax
Halifax’s figures broadly align with Nationwide, which earlier this week also reported that house prices fell slightly in March.
A slight ticking higher of mortgage rates may be the reason the spring property market has got off to such a drab start, experts suggest.
Mortgage rates fell in the five months between September and January this year and house price nudged higher at the same time.
But since the start of February, the average two-year fixed rate mortgage has risen from 5.56 per cent to 5.8 per cent, according to Moneyfacts.
Meanwhile, the average five-year fix has risen from 5.18 per cent to 5.39 per cent.
Kim Kinnaird, director at Halifax mortgages said: ‘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.
‘Financial markets have also become less optimistic about the degree and timing of Base Rate cuts, as core inflation proves stickier than generally expected.
‘This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year.’
Is the worst behind us? Mortgage rates have begun rising again after falling back from the highs they reached in the summer
What’s happening across the UK?
Something of north-south divide has opened up across the UK, with northern regions performing strongest and southern locations seeing the biggest falls.
In England, house prices in the North West are up by 3.7 per cent on an annual basis, while homes in Eastern England fell 0.9 per cent year-on-year.
Northern Ireland remains the strongest performing region in the UK – with house prices up by 4.3 per cent year-on-year.
On average, homes in Northern Ireland now cost £194,743, which is £7,972 more than a year ago.
In Wales annual property price growth slowed to 1.9 per cent in March, down from 3.9 per cent in February, with the average home now costing £219,213.
Meanwhile Scottish house prices rose by an average of 2.1 per cent year-on-year to stand at £204,835.
Jonathan Hopper, chief executive of Garrington Property Finders said: ‘All buyers remain highly price-sensitive and affordability is still a major hurdle for many would-be first-time-buyers.
‘For them, the sums simply don’t add up yet – even though homes are cheaper in many parts of the country than they were a couple of years ago, borrowing the money needed to buy them costs much more.
‘That’s why we’re seeing prices rise fastest in regions where affordability is better.
‘Regional differences in prices are throwing up some strong buying opportunities, but across the UK as a whole we’re likely to see price growth meander for the next few months as we wait for mortgage rates to start falling again.’
What next for house prices?
At the end of last year Halifax had forecast average prices to fall by between 2 and 4 per cent in 2024.
The mortgage lender appears to have changed its tune somewhat in the intervening months.
Kim Kinnaird of Halifax Mortgages added today: ‘Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.
‘Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market.
‘And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work.
‘However the housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year.’
Average house prices grew in March on a quarterly basis, by 2 per cent, with annual growth slowing to 0.3 per cent, down from 1.6 per cent growth in February
Property analysts and estate agents across the property market broadly seem in agreement that house prices are more likely to rise than fall going forward.
Anthony Codling, head of European housing and building materials for investment bank, RBC Capital Markets said: ‘Mortgage approvals are increasing, wages are rising, and in our view mortgage rates are more likely to fall than rise in the coming months, therefore looking forward we believe the housing markets glass to be half full rather than half empty.
Sam Mitchell, chief executive of online estate agent Purplebricks added: ‘March saw an anticipated slowdown in the housing market prompted by a small increase in mortgage rates at the start of the month.
‘We have already seen this trend beginning to reverse and expect to see improving house prices in the months ahead.
‘At the coalface, we are seeing robust viewing numbers and growth in offers that bucks the trend of what was a painful last six months of 2023.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.