UK house prices in March: a temporary dip or the start of a broader slowdown?
The property market in March showed some subtle changes from February, with Halifax reporting a 0.5% dip in recorded house prices, taking the average property value to £299,677. Annual growth eased from 1.2% in February to 0.8%, suggesting that the rate of recovery seen at the start of the year has slowed slightly.
It is not uncommon to see fluctuations in the market, especially when wider geopolitical tensions are creating uncertainty and contributing to increases in energy prices, inflation expectations and, in turn, mortgage rates.
Whether we will see this slowdown continue long term depends on how persistent these external pressures prove to be.
We are already seeing some easing in wholesale energy prices, which may help reduce inflationary pressure that built up earlier in the year.
While the monthly dip may cause some concern, it is important to take into account the wider trend. House prices had shown resilience in the early part of the year, even briefly reaching above the £300,000 threshold. With that in mind, a slight monthly decline could be seen as a pause in previous momentum rather than a complete slowdown.
Different indices also continue to tell slightly different stories. For example, Nationwide reported positive monthly growth and stronger annual increases over the same period, highlighting that the market remains stable but sensitive to external factors, rather than in outright decline.
These differences in reporting stem from the fact that both Halifax and Nationwide base their indices on their own mortgage lending data, which can lead to variations in short term trends, although their longer term views tend to align.
How has the market affected buyer demand?
Buyer demand has not disappeared, it has simply become more cautious. Higher borrowing costs continue to influence affordability, and buyers are proving to be more price-sensitive as a result.
However, data continues to show ongoing transaction activity. Although volumes are slightly lower, this suggests the market is adjusting rather than stalling.
Regional differences show positive activity
Despite an overall slowing in price growth, regional markets continue to show resilience. Areas outside London and the South East, particularly Northern England, Scotland and Northern Ireland, have continued to see stronger growth.
Regional price increases (Nationwide data):
- North East – £184,199 (+5.0%)
- North West – £247,442 (+3.1%)
- Eastern England – £246,636 (+0.5%)
- Northern Ireland – £224,809 (+8.7%)
- Scotland – £222,716 (+4.4%)
- Wales – £230,909 (+1.6%)
Improving outlook as pressures potentially ease
Looking ahead, there are early signs that some of the pressures impacting the market could begin to ease.
Falling wholesale energy prices may help reduce inflation expectations. This, in turn, could support greater stability in mortgage rates.
After the ups and downs of recent years, a period of slower, more stable growth may be more positive, supporting affordability and creating more sustainable, long-lasting market conditions for both buyers and sellers.
