House prices dip in March as annual growth also slows

House prices fell by 0.5% last month, reversing a 0.3% rise in February and leaving the average property value at £299,677, Halifax reveals.

Its data also shows that annual growth slowed down to 0.8%, down from 1.2% in March.

Regional house price differences remain and these are more pronounced, with stronger gains recorded outside southern markets.

Northern Ireland continues to record the strongest annual house price growth, with average values up 8.7% to £224,809.

Scotland also posted an increase of 4.4%, taking the average property price to £222,716.

Regional house prices

Wales saw prices rise by 1.6% over the year, with the typical home now valued at £230,909.

Across England, higher growth remains concentrated in northern regions.

The North East recorded a 5% annual increase, with prices at £184,119, while the North West saw values rise 3.1% to an average of £247,442.

In southern markets, prices moved lower and the South East recorded a 1.9% annual fall to £383,573.

London’s homeowners saw values decline by 1.2% to £536,751.

Housing market slowdown

Amanda Bryden, the head of mortgages at Halifax, said: “The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East.

“Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.”

She added: “The effect on house prices will largely depend on how long-lasting these pressures prove to be and the wider implications for the economy and unemployment.

“However, the recent increase in UK mortgage rates has been more modest than the sharp rises seen during the mini budget of 2022.”

Property sector reaction

Nathan Emerson, the CEO of Propertymark, said: “We are at an important intersection where we must clearly acknowledge future challenges ahead.

“We started the year with positivity in terms of seeing an uplift in the average number of viewings per available property, coupled with general consumer positivity regarding affordability.

“However, a lot has changed in a short space of time, with numerous sub 4% mortgage deals being withdrawn over the last few weeks as the wider economy adjusts to potential uncertainties.”

Karen Noye, a mortgage expert at Quilter, said: “Looking ahead, the path for house prices will depend largely on how the conflict evolves.

“If tensions ease and energy‑driven inflation pressures recede, mortgage rates could stabilise and drift lower again, supporting broadly flat prices.

“If the conflict drags on, persistently higher mortgage rates are more likely to translate into weaker activity and softer prices, particularly in more rate‑sensitive parts of the market.”

Tom Bill, the head of UK residential research at Knight Frank, said: “What goes up must come down, but for mortgage rates the drop will be more gradual than the sharp increase triggered by the Middle East conflict, even if the two-week ceasefire deal holds.

“Sentiment in the housing market will improve if the war stops, but its longer-term inflationary impact and weaker demand for UK government debt due its tight financial headroom and apparent inability to cut spending means mortgage rates won’t snap back to where they were in February. This will keep demand and house prices in check this year.”

Jason Tebb, president of OnTheMarket, said: “The momentum created by several interest rate reductions over the past year and a half, combined with post-Budget clarity, continues to be in evidence on the ground, with needs-driven buyers and sellers who have put moves on hold focused on transacting.

“With further rate reductions on hold for the short term at least, and the threat of rate rises a concern the longer the conflict in the Middle East continues, those with competitive mortgage offers are keen to proceed before rates edge higher.”