According to Halifax’s House Price Index, the average house price in the UK has decreased by 0.5% month-on-month in March, up from a 0.2% fall in February, a report has found.
The average house price comes to £296,699, which compares to £298,274 in the previous month.
Amanda Bryden, head of mortgage at Halifax, said: “House prices rose in January as buyers rushed to beat the March stamp duty deadline. 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.”
She continued: “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.
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“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.”
Northern Ireland reports strongest house price growth
Northern Ireland has the strongest annual house price growth of any nation or region, increasing by 6.6% year-on-year in March, with house prices standing at £206,620.
Scotland had the second-strongest house price growth at 4.3% annually, compared to 3.8% in February. The average house price in this region is £213,750.
Average house prices in Wales ticked up by 3.7% year-on-year in March to an average of £227,332.
Within England, Yorkshire and the Humber had the biggest annual growth at 4.2%, with average house prices coming to £215,807.
London had the slowest annual house price growth at 1.1% in March, which is a drop from 1.5% in February. The region still has the highest average house price in the UK, at £543,370.
Housing market hoping for ‘seasonal boost’ but stamp duty drop-off expected
Sara Palmer, distribution director at The Mortgage Lender (TML), said the stamp duty deadline of 31 March meant that activity and prices “dropped off” in March.
She explained: “With the summer months approaching, the sector will be hoping for a seasonal boost in activity, with competitive mortgage rates and deals set to help make homeownership more accessible.
“However, unless the Government makes significant progress in addressing the housing shortage and affordability, the boost to activity is unlikely to be sustainable as we still desperately need more stock to meet demand, and greater support for first-time buyers.”
Palmer said lenders were “stepping in to offer innovative products, such as for shared ownership and joint borrower sole proprietor, to help young people get onto that all-important first rung of the property ladder”. However, “more is needed from a policy level”.
“For those that are considering buying, it’s best to get in touch with a broker to discuss your options,” she noted.
Gareth Lewis, managing director of specialist lender MT Finance, agreed, and added: “The housing market needs some stimulus as even with the better weather, the flurry of activity one would expect in springtime is being dampened by the National Insurance hikes and having to pay more for everything.
“We have been seeing marginal uplifts in pricing on relatively small volumes of transactions; now, we are seeing marginal decreases on larger volumes of transactions. Buyers are pushing harder to get a better deal, even if it is just marginal, particularly those who are going to pay higher stamp duty because they were too late to meet the deadline.
“Many will try and renegotiate as the month progresses, but their success is likely to vary from transaction to transaction.”
Housing market resilience under question with uncertain US policy
Karen Noye, mortgage expert at Quilter, said the “housing market’s resilience is wavering with a second monthly decline in prices”.
She continued: “Borrowing still remains expensive by historic[al] standards. Many would-be movers paused plans last year due to volatility in the mortgage market, and we are now seeing signs of that demand returning — albeit cautiously, resulting in volatile monthly house price indices. But the traditional spring bounce appears to be more muted than usual.
“Adding to this, the news of tariffs might start to spook would-be buyers as, once again, unpredictability seeps into the market. But, at present, swap rates, which dictate fixed rate mortgage deals, have tumbled as traders speculate that there could now be further rate cuts to fuel economic growth in the face of the impact of the tariffs. Affordability therefore could improve, at least in the near term.”
Noye noted that recent stamp duty changes, which came into effect on 1 April, could have also influenced buyer behaviour.
“The reduction of the nil-rate threshold from £250,000 to £125,000 means that more buyers are now subject to stamp duty charges. First-time buyers are particularly affected, with their threshold decreasing from £425,000 to £300,000.
“These adjustments have led to a flurry of activity as buyers aimed to complete purchases before the deadline, but by March, it would have been too late reducing demand and driving down prices. We may see a continued short-term dip in transactions as the market adjusts to the new tax landscape, with house prices dropping slightly too,” she noted.
Noye added that “enduring supply constraints continue to prop up prices avoiding big drops”, but the market’s trajectory will depend on how the UK economy is impacted by new policies from the US.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Average UK house prices jump 2.8% YOY in March – Halifax
