UK house prices fell in March, with the average property value dipping back below £300,000 to £299,677, according to Halifax. The 0.5% monthly decline reflects a loss of momentum in the housing market amid uncertainty over the conflict in the Middle East and its impact on the economy and interest rates.
The annual rate of house price growth also slowed to 0.8%, down from 1.2% in February. Halifax attributed the slowdown to dampened market momentum caused by the Middle East conflict, which has pushed up energy costs and inflation expectations, leading to higher mortgage rates. The average two-year fixed residential mortgage rate rose to 5.84% by the end of March, the highest since July 2024, and hundreds of mortgage products were pulled from the market.
Expectations that the Bank of England might raise interest rates several times this year have driven up the cost of fixed-rate mortgages, though traders reduced forecasts after a temporary ceasefire between the US and Iran. Halifax’s head of mortgages, Amanda Bryden, noted that the effect on house prices would depend on how long-lasting these pressures prove and their wider implications for the economy and unemployment.
Regionally, Northern Ireland led annual house price growth with an 8.7% rise, followed by Scotland at 4.4%. In England, stronger growth remained concentrated in northern regions, while prices in the south-east fell 1.9% year on year and London saw a 1.2% decline. UK housebuilding activity also continued to decline in March, with S&P Global’s construction purchasing managers’ index showing a fall in orders and a rapid acceleration in input cost inflation due to rising fuel, transportation, and raw material prices.
