UK house prices declined in March for the first time in six months, according to the latest data from Halifax.
The average cost of a home stood at £288,430 last month, down 1% from February as higher mortgage rates made it harder for buyers to afford a mortgage.
Prices were still up by 0.3% compared to a year ago, however, and rose by 2% on a quarterly basis.
Separate figures from Nationwide showed a similar picture, with a monthly drop of 0.2% in March but annual growth of 1.6%.
“That a monthly fall should occur following 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,” said Kim Kinnaird, director of Halifax Mortgages. “Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.
“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. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly.”
Amid uncertainty over when the Bank of England will decide to cut interest rates, some lenders have pushed up rates on their mortgage deals.
“This has stalled the decline in mortgage rates that had helped to drive market activity around the turn of the year,” Kinnaird said.
She added that although underlying demand is “positive”, as reflected in a recent increase in mortgage approvals, the market “remains sensitive to the scale and pace of interest rate changes”.
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