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UK house prices fall for first time in six months

Halifax predicts the housing market will remain subdued this year

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House prices across the UK fell by 1% last month after five months of growth, according to Britain’s biggest mortgage lender.

A typical home now costs £288,430, about £2,900 less than last month, said Halifax, which is part of Lloyds Banking Group. The monthly drop, the first since September, came after a 0.3% gain in February.

Compared with a year earlier, prices rose 0.3%, compared with 1.6% last month.

A rival survey from Nationwide building society showed that the average UK house price fell by 0.2% month on month in March.

Kim Kinnaird, the director of mortgages at Halifax, said: "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."

Markets are pricing in a potential first cut in interest rates by June, and a total of three quarter-point reductions by December.

The broader picture is that prices are up year on year, reflecting the opposing forces of an easing cost off living squeeze and relatively high interest rates, she said.

Kinnaird predicted that the housing market would remain subdued this year: "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."

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• 1.30pm BST: US non-farm payrolls for March (forecast: 200,000)
• 1.30pm BST: US jobless rate for March (forecast: 3.9%)

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