'Market reset' sees house price growth ease to 0.3%: Halifax

"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"
- Kim Kinnaird - Halifax

The latest market analysis from Halifax has revealed that the price of a typical UK home grew by +0.3% annually - falling from +1.6% in February.

According to Halifax data, average house prices saw a 1.0% decline during the month, following a rise of +0.3% in February.

A typical UK home now costs £288,430, around £2,900 less than last month.

National and regional breakdown

Northern Ireland remains the strongest performing nation or region in the UK – with house prices up by
+4.3% on an annual basis. Properties in Northern Ireland now cost an average of £194,743, which is £7,972 more than a year ago.

In Wales, annual property price growth slowed to +1.9% in March, from +3.9% in February, with the average home now costing £219,213. Meanwhile, Scottish house prices rose +2.1% year-on-year to stand at £204,835.

North / South divide remains

Something of a north/south divide exists in England, where the North West saw the strongest growth, up by +3.7% on an annual basis to £232,315. Properties in Eastern England recorded the biggest decline of -0.9%, with homes selling for an average of £330,627, a drop of £2,878 over the last year.

London continues to have the highest average house price in the UK, at £539,917. Prices in the capital have increased by +0.4% over the last year.

Kim Kinnaird, Director, Halifax Mortgages, said: “UK house prices grew in March on a quarterly basis, by +2.0%, with annual growth slowing to +0.3%, from 1.6% in February. Compared to last month, the price of a UK property fell -1.0% or £2,908 in cash terms, with the average property now costing £288,430.

“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.

“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.

Year-on-year figures remain positive

“The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high-interest rates. 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.”

Tom Bill, head of UK residential research at Knight Frank, said: “Since November, ten weeks of recovery in the UK housing market have been followed by ten weeks of drift. Mixed signals around inflation, rising supply and a wave of people rolling off sub-2% fixed-rate mortgages agreed in early 2022 mean the direction of travel for the property market is currently sideways.

"Once a rate cut appears firmly on the horizon and more mortgage rates start with a 3, we expect stronger demand to push UK prices 3% higher this year.”

Nathan Emerson CEO at Propertymark comments: “Spring tends to be one of the busiest times of the year for the housing market, and with inflation falling and interest rates remaining static, homebuyers have adjusted to the latest market conditions.

"This should result in a surge of new buyers, sellers, and properties coming to the market as the year progresses. This was reflected in Propertymark’s latest Housing Insight Report, which found that there has been an 18 per cent increase in the number of new properties coming to the market.

"However if inflation continues to drop to pre-pandemic levels, Propertymark is hopeful that interest rates will also start to fall, and the whirlwind of economic turbulence will finally settle for everyone once again.”

Matt Thompson, head of sales at Chestertons, says: “In March, the property market witnessed steady demand from buyers although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since resumed their property search.

"As a result, March concluded the first quarter of the year with a busy property market – particularly in the capital where demand continues to outstrip supply.”

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “While it’s too early to say if there’s going to be a traditional post-Easter bounce for family houses, we have noticed flats are performing better than in a long time with an increase in first-time buyer activity, which is crucial for a healthy market.

“This is mostly down to the generosity of the Bank of Mum and Dad, as this rebound in first-time buyer activity would not have been likely without parental assistance, particularly in London and the southeast.

"However, not everyone has help with their deposit, which is why lender innovation, such as the recent launch of the 99 per cent mortgage by Accord, is so crucial in getting the market moving.”