Average UK house prices experienced their first monthly decline of 2026 in March, falling by 0.5 percent according to the latest Halifax House Price Index. This dip follows increases of 0.8 percent in January and 0.3 percent in February, signaling a shift in market momentum as geopolitical tensions create widespread uncertainty.
Market Uncertainty and Economic Impact
Halifax has directly attributed the housing market slowdown to uncertainty surrounding the ongoing conflict in the Middle East. Amanda Bryden, head of mortgages at Halifax, explained that concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates. This development has reduced confidence that interest rates will be cut this year, dampening the initial market momentum observed at the start of 2026.
The average UK house price stood at £299,677 in March, with annual growth in property values softening to 0.8 percent, down from 1.2 percent the previous month. Bryden noted that while the recent increase in UK mortgage rates has been more modest than the sharp rises seen during the 2022 mini-budget, many households on fixed deals remain protected from the latest rate increases.
Regional Variations in House Price Performance
The Halifax report reveals significant regional disparities in house price growth across the United Kingdom:
- Northern Ireland continues to lead UK annual house price growth with average prices up by 8.7 percent over the past year to reach £224,809
- Scotland recorded strong growth with average house prices rising by 4.4 percent annually to £222,716
- Wales saw a more modest average house price increase of 1.6 percent annually, taking typical home values to £230,909
- In England, stronger price growth remains concentrated in northern regions, with the North East showing approximately 5 percent annual growth to £184,119 and the North West recording 3.1 percent growth to £247,442
Expert Analysis and Market Outlook
Tom Bill, head of UK residential research at Knight Frank, commented: "What goes up must come down, but for mortgage rates the drop will be more gradual than the sharp increase triggered by the Middle East conflict, even if the two-week ceasefire deal holds." He emphasized that factors including longer-term inflationary impact mean mortgage rates won't return to February levels quickly, which will keep demand and house prices in check throughout the year.
Karen Noye, a mortgage expert at wealth manager Quilter, highlighted the delayed impact of mortgage cost changes on house prices: "Changes in mortgage costs do not feed through to house prices immediately, so any meaningful shift in price momentum linked to the recent rise in borrowing costs is likely to emerge from this point onwards."
Nathan Emerson, chief executive officer of Propertymark, noted the rapid change in market conditions: "We started the year with positivity in terms of seeing an uplift in the average number of viewings per available property, coupled with general consumer positivity regarding affordability. However, a lot has changed in a short space of time, with numerous sub-4% mortgage deals being withdrawn over the last few weeks as the wider economy adjusts to potential uncertainties."
Resilience in Certain Market Segments
Despite the overall market uncertainty, some estate agents report continued activity among serious buyers. Amy Reynolds, head of sales at London-based estate agency Antony Roberts, stated: "The underlying market remains robust. Serious buyers are still very active, with second viewings continuing and sales being agreed at levels typical for this time of year. While there is greater awareness of cost, for the right property, committed buyers are continuing to move forward with confidence."
Iain McKenzie, chief executive officer of The Guild of Property Professionals, added that sales agreed remain relatively stable despite the broader market challenges.
Complete Regional House Price Data
Here are the complete average house prices and annual changes according to Halifax regional data:
- East Midlands: £333,455, minus 0.6%
- Eastern England: £246,636, 0.5%
- London: £536,751, minus 1.2%
- North East: £184,119, 5.0%
- North West: £247,442, 3.1%
- Northern Ireland: £224,809, 8.7%
- Scotland: £222,716, 4.4%
- South East: £383,573, minus 1.9%
- South West: £301,859, minus 0.6%
- Wales: £230,909, 1.6%
- West Midlands: £265,126, 1.7%
- Yorkshire and the Humber: £217,704, 1.2%
The housing market faces continued uncertainty as geopolitical developments influence economic conditions, mortgage rates, and buyer confidence across the United Kingdom.
