Property prices grew by 0.3% annually in March, new data from Halifax’s monthly House Price Index has revealed.
The index also found that house prices rose by 2.0% in Q1, when compared to the previous quarter (Q4 2023).
The average house price fell by -1.0% in March on a monthly basis, following a rise of +0.3% in February.
In addition, a typical home now costs approximately £288,430, around £2,900 less than last month.
Northern Ireland remained the strongest performing nation or region in the UK – with house prices up by +4.3% on an annual basis.
Properties in Northern Ireland costed 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 costing £219,213.
Meanwhile Scottish house prices rose +2.1% year-on-year to stand at £204,835.
Something of 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 continued to have the highest average house price in the UK, at £539,917.
Prices in the capital have increased by +0.4% over the past year.
Kim Kinnaird, director at 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.”
Kinnaird added: “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.
“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.”
She concluded: “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.”
Reaction:
Craig Fish, director at Lodestone Mortgages & Protection:
“Mortgage affordability is proving difficult at present, but the British stiff upper lip has reappeared.
“People have now become more accepting of higher rates, are living within their means and simply getting on with it.
“Enquiries are up as people get to understand their situation, so all that is needed now is that first base rate cut from the Bank of England and the market should reignite.
“This will be the time when the market starts to shift from being a buyers’ market to a sellers’ market, so anyone looking to buy shouldn’t put it off any longer.”
Graham Cox, director at SEMH Self-Employed Mortgages:
“Homeowners are getting so many mixed signals about house prices, it’s no wonder the housing market is in a state of flux.
“Many vendors are still unrealistic on price and following the market down.
“Buyers are waiting for the Bank of England to cut the base rate and mortgage rates to fall further.
“Until then, buyers and sellers are engaging in a Mexican stand-off.”
Ben Perks, managing director at Orchard Financial Advisers:
“Right now, affordability in the mortgage market is like a perfect storm.
“Rates are high, lenders have tightened their belts and household budgets are being stretched to breaking point.
“The knock-on effect of this is that, as people struggle to get the loan sizes they enjoyed in the ‘Pre-Truss’ era, property prices are under pressure.
“Long gone are the days when houses would sell over asking price in the blink of an eye.
“Things are much more cautious now. The obvious solution is a Bank of England base rate reduction.
“When this happens, conditions will improve almost overnight. I’m confident by the end of the year we will have battled through this storm, but we face some inclement conditions en route.”
Ying Tan, CEO at Habito:
“Rates are high and household budgets are being squeezed, which makes affordability challenging.
“We have seen first-time buyers return to the market in 2024, however they need more help with innovative schemes and a reduction in the bank base rate.
“House prices should remain steady and flat in 2024, so activity will increase if we see levers pulled to improve affordability.
“All eyes are on the next set of inflation data and Threadneedle Street.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“Confidence is king. Sadly, the king has been absent in the property market for a while, with lots of talk and fear around interest rates.
“Some people are worried they may commit to a property purchase and see rates increase, others are holding off thinking rates are going to fall and they can get a cheaper mortgage.
“In either scenario, the result is a slow market, whilst everyone waits for ‘something’. However, it may be that the ‘something’ never actually arrives.
“Even if the base rate reduces, which is widely expected, it will have a marginal impact on mortgage rates, which have already priced the expected reduction in.
“As time goes by and the feared increases don’t come, and the hoped-for reductions don’t come, then people will get used to this level of mortgage interest being ‘normal’ and so begin to feel more confident in making those big decisions around buying property or moving home. How long it takes for that confidence to return is anyone’s guess.”
Dariusz Karpowicz, director at Albion Financial Advice:
“Affordability is the elephant in the room, particularly for first-time buyers who find house prices are outpacing wages significantly.
“With the average property now requiring about eight times the average income, the squeeze is on.
“A potential rate cut in 2024 might not be the silver bullet many hope for; it could even push prices up further by making borrowing slightly cheaper.
“The market is bustling with listings, but don’t expect massive bargains.
“Prices in 2024 are likely to be steady as she goes, with a chance of slight increases, unless unforeseen events shake things up.”
Oliver Fish, director at Oliver & Co.:
“Affordability is a real issue at present.
“The cost of borrowing is making buyers think whether they should buy something smaller, in a cheaper area or wait to see if borrowing gets cheaper.
“We need to see the Bank reduce the base rate for conditions to improve. Two or three rate reductions would really ignite the market.
“Any incentives to help with stamp duty would also help drive activity levels. In London, there are definitely fewer landlord investors at the moment.
“Most buyers in central London are cash buyers who are buying for themselves to live in.
“Buyers are not having to negotiate so hard on price now as most sellers have come to realise the market has been price sensitive so have priced their properties accordingly.
“I am expecting house prices to stay the same throughout 2024 and possibly start increasing in 2025 if we do see at least a couple of interest rate drops.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“The biggest problem in the housing market currently is a mixture of unrealistic sellers coupled with stretched affordability due to higher rates.
“It’s still a buyers’ market, and the number of first-time buyers hunting for bargains has increased over the past few months.
“So, if we’re fortunate enough to get a base rate cut anytime soon, we’ll see those numbers increase, and once that happens, there’s every chance that house prices may begin to increase, most likely at the back end of the year.
“Now is the time for first-time buyers to snap up value if they can find and negotiate it.”
Bob Singh, founder at Chess Mortgages:
“Financial woes continue to weigh on homeowners as we enter the home straight towards a highly anticipated rate cut in either May or June.
“The desire to buy is fierce. Lender innovation is just trickling through tentatively as more lenders are sure to follow Skipton and Accord’s lead.
“Halifax figures will echo those of Nationwide and show a flat market overall.
“With prospects predicted to improve post June the property market is likely to be in positive territory by year end.
“The current buyers’ market will surely turn to a sellers market in the coming months as first time buyers pile into the market to escape extortionate rents.
“Inflationary cross winds and other economic data continue to concern the Bank of England who are being uber-cautious on rates. However, the green shoots are definitely visible.”
Gary Bush, financial adviser at MortgageShop.com:
“This is another demonstration of the great divide between the Halifax and the Nationwide in their House Price Indices.
“We expected that the Halifax would show a different stance to their competitor.
“We fear that both the general public and mortgage lenders are going to be caught out by the rush that will inevitably come once the Bank of England does the obvious, shortly, and reduces the base rate.
“The capacity of available property and staff at lenders is low at present, especially the latter. 2024 looks very much to be demonstrating a lively market for first-time buyers, downsizers, and upsizers.”
Rhys Schofield, brand director at Peak Mortgages and Protection:
“Here at the coal face, activity during both March and the first quarter has been up hugely on the same quarter last year.
“It’s always worth bearing in mind that house transactions take over three months on average to go through meaning that anything measuring sales and completions will be many months behind the curve.
“With rate cuts seemingly round the corner, I’d expect to see house prices increase over the year.”
Rohit Kohli, director at The Mortgage Stop:
“Even though rates are lower than 12 months ago, borrowers are still struggling with affordability, especially first-time buyers.
“Demand is there from would-be homeowners but with a combination of sticky property prices fuelled by sellers still expecting to achieve higher than the listed asking price and unaffordable monthly payments, we’re seeing a slowdown in transactions.
“Borrowers are looking for lower interest rates, and if/when we see these then it should open up more opportunities.”
Akhil Mair, director at Our Mortgage Broker:
“Affordability concerns loom large, with recent data showing a slight house price dip exacerbated by higher interest rates, hindering transactions and potentially prolonging sluggish market activity.
“A single base rate cut might help, but two to three reductions within six months could significantly reignite the 2024 property market, boosting buyer confidence and demand.
“In the South, downsizers and landlords are active, while the North sees more first-time buyers and landlords seeking higher yields, reflecting regional market dynamics.
“Buyers maintain negotiation power, with sellers adjusting to the buyer-centric market, and this is expected to persist for the foreseeable future.
“Property prices in 2024 are likely to be flat and steady, influenced by inflation, Bank of England rate decisions and political developments in the fourth quarter..”
Austyn Johnson, founder at Mortgages For Actors:
“There is usually a slight dip in activity before summer.
“When summer fully hits, we will see a spike in sales.
“This usually then tapers out by late August and September. It’s the same every year.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“News that house prices may be slowing contradicts the current heightened sense of activity in the market, but other lenders such as Nationwide are also seeing the same trend.
“The property market is still in recovery, and we are likely to see ebbs and flows through the year as buyers navigate challenging living costs.
“The healthy level of mortgage approvals is a far cry from the position at the start of last year, and it is encouraging to see that buyers are finding it easier to get lenders on their side.
“We anticipate that the coming months will see demand increase further still. Buyers typically prefer to move during the warmer months, and in turn this will increase competition and bolster house prices.
“Owning their own home is an attractive aspiration for many potential buyers as rental prices reach record highs. Those that are in a position to buy will be greeted with a wider variety of homes for sale than there were just six months ago.”
Karen Noye, mortgage expert at Quilter:
“According to the latest Halifax figures, compared to last month, the price of a UK property fell a significant -1.0% with the average property now costing £288,430.
“The UK housing market is currently navigating through a phase of cautious recovery, a period characterised by moderated growth and as shown this morning the occasional drop in prices.
“The early surge in price increases seen at the start of the year is now showing signs that it was not as robust as once hoped, indicative of a market adjusting to significant economic pressures.
“However, a spring surge as a result of a revived buyer confidence may help house prices to increase at pace again.
“The dynamics of the mortgage market have played a pivotal role in shaping the current state of the property market.
“Initial cuts in mortgage rates sparked a renewed interest among potential buyers and movers, who had previously adopted a wait-and-see approach due to the financial uncertainties of 2023.
“However, the subsequent slowdown in rate reductions by lenders has served to keep property price rises in check.
“Looking ahead, the anticipation surrounding the Bank of England’s monetary policy decisions will have its own like positive impact on the market.
“With expectations leaning towards a reduction in interest rates in the not-too-distant future, there’s a sense of optimism about the market’s direction.
“However, this should be tempered by the fact that the market is incredibly sensitive to broader economic indicators and one hiccup can cause a significant downward reaction.
“The interplay between mortgage rates, economic policies, and buyer sentiment is shaping a landscape where stability is the desire right now and if we can get some semblance of that house prices are likely to start to increase again in line with demand.”
Sam Mitchell, CEO of Purplebricks:
“The blip in house prices was caused by a small increase in rates at the start of March, since then we have seen banks compete more aggressively, rates reduce further, inflation come down ahead of expectations, and both viewings and offers levels are ahead of expectations.
“Given the Bank of England’s future guidance is pointing to further cuts we expect prices gradually increase throughout the year until the inevitable uncertainty of the General Election bites probably in October.
“Sellers should act without delay if they want to take advantage of what should be a busy spring market.
“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.”
Nathan Emerson CEO at Propertymark:
“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% 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.”
Kate Steere, property expert at finder.com:
“Today’s figures show that the events from last year are still weighing heavily on prospective buyers’ minds.
“While lenders have cut mortgage rates and wage growth has outstripped inflation, the turmoil from the past 12 months is still casting a dark shadow on demand.
“The Bank of England’s decision to hold rates has dampened UK house price recovery.
“Half of experts believe that the Bank will wait until June 2024 before cutting rates, so as a result we’re likely to see only a subdued recovery in house prices over the next couple of months.”
Guy Gittins, Foxtons CEO:
“House prices have continued to creep up since the start of the year and this improvement in market health has been driven by the returning appetite of UK homebuyers.
“While higher mortgage rates certainly remain an obstacle, there has been a dramatic increase in buyer activity levels and it’s not just in the form of enquiries and viewings, with more offers also being made.
“With the general expectation that interest rates are set to fall sooner rather than later, we anticipate that market conditions will only continue to improve as buyer confidence builds.”
Marc von Grundherr, director of Benham and Reeves:
“It’s clear that nation’s homebuyers are marching on, determined to realise their aspirations of homeownership in 2024, regardless of higher mortgage rates and a lack of any Government offered incentives.
“This determination has already had a positive impact on the UK property market and we’ve started the year with a far greater degree of market stability than we’ve seen in recent months, with conditions only likely to improve as the year progresses.”
Jason Harris-Cohen, CEO of Open Property Group:
“We’ve seen buyers returning to the fold so far this year but patience remains key for those looking to sell.
“Yes, market conditions have improved notably, but the higher cost of borrowing remains a challenge and so it’s important to take your time and find a buyer in a proceedable position, rather than opting for the one offering the highest price.
“Doing so will give you a far better chance of making it through to completion unscathed and without succumbing to the dreaded fall through.”
Ed Phillips, Lomond CEO, said:
“We certainly don’t want to run before we can walk, however, the consistently positive house price performance seen since the start of the year certainly suggests that the market is heading in the right direction.
“While it’s likely to be a more measured year compared to the explosive rates of house price growth seen during the pandemic boom, property values remain close to record highs and there’s no sight of the market collapse that was so widely predicted last year.
“In this respect, it’s never been a better time to sell.”
Ruth Beeton, co-founder of Home Sale Pack:
“Following a period of prolonged fence sitting, the nation’s buyers and sellers are now returning to the fold and while this is great news for overall market health, this increase in demand is likely to put a strain on the industry from an operational standpoint.
“We saw just how ill-equipped the UK property market was when it came to dealing with heightened market activity levels during the pandemic boom and the long delays that followed as a result of an archaic home selling process. Not to mention the sharp increase in the number of sales that fell through.
“Unfortunately, little has been done to learn from this and so buyers and sellers are best advised to act sooner, rather than later, if they don’t want to suffer from the same fate as the market starts to heat up.”
Jonathan Hopper, CEO of Garrington Property Finders:
“Rather than accelerating away into another boom, changing market conditions have applied a slight dab on the brakes to house prices.
“Two things are behind March’s 1% dip in average prices – a jump in the number of homes for sale and the plateauing cost of borrowing.
“In some areas the number of homes coming onto the market is four times higher than the number of new buyers registering with estate agents – and this surge in supply is holding back prices.
“Gone too is the flurry of cheaper mortgage deals announced in the early weeks of the year that kick-started the market and sent property prices notching up.
“Instead mortgage rates are now holding broadly steady, and we’re unlikely to see lenders cutting rates significantly again until after the Bank of England confirms it is ready to unwind its tight monetary policy.
“As a result, 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. Average prices jumped by 3.7% in the North West, but dropped by 0.9% in Eastern England in the 12 months to March.
“At a national level, the news is good. The number of mortgages approved in February climbed to a 17-month high, as buyers who sat out 2023 return to the market, and as more stock comes onto the market things are becoming much more free-flowing.
“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.”
