First monthly drop in prices for six months reported

Annual house price growth has slowed, according to Halifax.

The lender’s latest house price index shows the average house price in the United Kingdom was £288,430 in March, down 0.3% on the figure for the same month in 2023.

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This comes off the back of year-on-year increases of 1.6% and 2.3% in February and January, suggesting a slowing down of the market.

Average prices in March were 1% down on those reported in February, representing the first monthly drop for six months.

Kim Kinnaird, director at Halifax Mortgages, said the monthly fall after five months of consecutive group was “not entirely unexpected” give the “reset the market has been going through since interest rates began to rise sharply in 2022”Kinnaird however said prices have been surprisingly resilient in the face of higher borrowing costs.

He said: “Affordability constraints continue to be a challenge for prospective buyers, while existinghomeowners 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.

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“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.”

The figures follow Nationwide’s house price index earlier this week which showed prices fell month-on-month by 0.2% in March, but were still up 1.6% year-on-year.