The housing market remains stable but is still sensitive to the scale and pace of interest rate changes, according to Halifax.

House prices went up by 2% in March compared to the previous quarter, but annual house price growth has slowed, and house prices fell by 1% in March on a monthly basis.

According to the lender’s latest House Price Index, annual growth has slowed to 0.3% from 1.6% in February. The average UK property price fell by 1% compared to last month, or £2908 in cash terms. The average UK property now costs £288,430.

Halifax says that a fall in the scale of monthly growth after 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’.

‘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,’ says Kim Kinnaird, Director of Halifax Mortgages. ‘Financial markets have 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 the market activity around the turn of the year.’

House prices up year on year

However, house prices are up year-on-year, and prices haven’t changed significantly over the past few years. They are still almost £50,000 above pre-pandemic levels, according to Halifax.

Housing demand remains positive, with more people buying homes and mortgage approvals up. As rental costs have risen, prospective first-time buyers may be more enticed to get onto the property ladder.

‘With rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work,’ says Kinnaird.

Northern Ireland remains the strongest performer in the UK, with house prices up by 4.3% annually. In Wales, property prices slowed to 1.9% in March from 3.9% in February, with prices in Scotland up by 2.1% year on year.

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