UK house prices fall in March for first time in six months

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UK house prices fell in March, according to the lender Halifax, surprising economists by ending a five-month stretch of consecutive increases and adding to signs of inconsistency in the property market recovery.

The average price fell 1 per cent month on month in March, down to £288,430 from February, when UK house prices hit a 16-month high of £291,338.

The Halifax data also showed that prices in March were 0.3 per cent higher than a year earlier, a much smaller annual rise than the 1.45 per cent expected by economists polled by Reuters.

“Affordability constraints continue to be a challenge for prospective buyers,” said Kim Kainnard, director of Halifax mortgages. “House prices have shown surprising resilience in the face of significantly higher borrowing costs.”

The figures align with Nationwide numbers out earlier this month, which also showed an unexpected decrease in average home prices. Meanwhile, mortgage approvals rose in February, hitting a 17-month high, according to the Bank of England.

However, Kainnard remained optimistic about the market, saying that despite the monthly decrease, the data reflected improvements in the UK’s cost of living crisis.

“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,” Kainnard said.

Economists said continued changes in house prices will depend upon the future path of interest rates.

In a recent interview, BoE Monetary Policy Committee member Jonathan Haskel suggested cuts were “a long way off”.

“Mortgage rates will fall only gradually from here, with markets expecting the Bank of England to ease restrictions on policy slowly, with services inflation remaining high,” said Rob Wood, chief UK economist at Pantheon Macroeconomics. “This means affordability will be stretched, and that should limit house price rises.”