UK house prices fall for first time in six months

5th April 2024
Home > News > UK house prices fall for first time in six months

Reported by the BBC News

House prices fell in March for the first time in six months, according to the latest data from Halifax.

The lender said prices dropped by 1% last month, with higher mortgage rates affecting affordability for prospective buyers.

The average house price fell by about £2,900 to £288,430.

However, Halifax said that house prices were still ahead of where they were last year.

Prices were 0.3% higher in March from a year earlier, although that was down from the 1.6% annual increase seen in February.

Kim Kinnaird, director of Halifax Mortgages, said the monthly fall in prices between February and March was "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," she said.

“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."

Halifax's findings echo rival lender Nationwide, which earlier this week also reported a fall in house prices during March.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said rising mortgage rates had "finally taken a toll on the housing market".

"Through February we had the price momentum of buyers who’d already agreed cheaper mortgages in January. Now that’s petering out, and prices have fallen," she said.

UK interest rates hit record lows during the Covid pandemic, but the Bank of England began raising rates at the end of 2021 as it sought to keep control of inflation - the rate at which prices rise.

This had a knock-on effect on mortgage rates which also began to increase, making it more expensive to borrow money for buying a house.

Mortgage rates peaked last summer and began to fall as expectations grew that the Bank of England will start to cut interest rates this year.

This led to a pick-up in activity in the housing market and February saw the highest number of mortgage approvals since September 2022, according to Bank of England data released earlier this week.

However, doubts about whether the Bank of England will reduce rates as quickly as some had expected has stalled cuts to mortgage rates, and some lenders have pushed them back up.

"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," said Ms Kinnaird.

Halifax's house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.

Share this article
  • icon
  • icon

Related News Articles

Bank raises interest rate again as expected to 4.5%

The Bank of England has raised interest rates by 0.25% to 4.5% as expected today, after a majority of the Bank’s Monetary Policy Committee (MPC), headed by Governor Andrew Bailey (pictured) voted for the increase again. This increase is the 12th successive rise, taking the rate to its highest level in almost 15 years. The Bank is reacting to a stubborn inflation figure,...

Property industry reacts to Rightmove House Price Index

The average asking price for newly-listed homes has risen 3% over the last 12 months, despite higher mortgage costs, according to Rightmove. The property portal said that the typical asking price had increased by £2,906 to £365,357 in the year to mid-March, as the market showed ‘cautious signs of recovery’ following turbulence caused by the infamous mini...

Asking prices remain flat but first-time buyers are back.

Average new seller asking prices rose by just £14 over past month, according to Rightmove, but first-time buyers are rejoining market driven by increasing rents and recovery in mortgage pricing. Average new seller asking prices rose by just £14 from January to February – the smallest ever increase recorded by Rightmove during the period and a sure sign that s...

OnTheMarket: Buyers should transact before the General Election season

OnTheMarket president Jason Tebb has cautioned buyers against waiting for an interest rate cut and General Election before making a transaction decision. Tebb said that it is understandable that buyers may be waiting for inflation to fall further and the cost of borrowing to drop, but he warned there is a limited timeframe to transact before the General Election when there c...