UK average house prices were down by -0.5% in March, a drop of £1,575. Despite this, the annual growth rate remained steady at +2.8%, with the typical UK property now valued at £296,699 according to Amanda Bryden (pictured), Head of Mortgages, Halifax.

Slowdown

It was in London where the slowdown in house prices was the most pronounced, with annual growth dropping from +1.5% in February to +1.1% in March.

Bryden says: “House prices rose in January as buyers rushed to beat the March Stamp Duty deadline. However, with those deals now completing, demand is returning to normal and new applications slowing.

Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.”

“Our customers completed more house sales in March than in January and February combined, including the busiest single day on record. Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.

“Looking ahead, potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and an uncertain economic outlook.

“However, with further base rate cuts anticipated alongside positive wage growth, mortgage affordability should continue to improve gradually, and therefore we still expect a modest rise in house prices this year.”

Industry reacts

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, says: “Property prices are being held in check due to affordability constraints and cautious buyer sentiment. Prices are unlikely to fall in prime areas where there is limited stock, but equally prices won’t rise until mortgage rates are deemed to be more ‘affordable’ again.

“The Stamp Duty concession encouraged buyers to bring forward transactions, with a flurry of activity in the first quarter. Now that is behind us, it will be interesting to see the reaction.

Pause for thought

“On the ground, well-priced and well-presented homes continue to sell relatively quickly; while buyers may be pausing to assess financial implications before taking the plunge, high-demand areas are retaining interest.”

CEO of Yopa, Verona Frankish, comments: “Despite a marginal month-on-month reduction, the long-term view of the UK property market shows that house prices continue to sit higher than they did this time last year and even versus the previous quarter.

Market confidence growing

“The nation’s homebuyers have responded favourably as mortgage rates have fallen from the peak seen in August 2023 and whilst they may remain considerably higher than they’ve become accustomed to, market confidence and property values have grown in line with the expectation that the cost of borrowing is only set to trend downwards over the coming year.”

The positive news is that US trade tariffs announced last week have put downwards pressure on borrowing costs.”

Tom Bill, head of UK residential research at Knight Frank, said: “As buyers adapt to higher rates of Stamp Duty, the positive news is that US trade tariffs announced last week have put downwards pressure on borrowing costs as markets price in an economic slowdown.

“The Bank of England is now expected to cut rates three times this year rather than twice. The risk is that tariffs ultimately prove to be inflationary and the spillover effects mean upward pressure on mortgage costs in the UK. For now, the spring market feels steady although the prospect of a tax-raising autumn Budget will throw more uncertainty into the mix later this year.”

Chief Sales Office for Foxtons, Jean Jameson, comments: “The property market momentum seen throughout 2024 has continued over the first quarter of this year, with the recent reductions to interest rates and the resulting improvements to mortgage affordability proving to be the greatest motivator for homebuyers entering the market in 2025.

Prices to strengthen

As the year progresses we expect to see house prices continue to strengthen, buoyed by the prospect of further interest rate reductions.”

Jason Tebb, President of OnTheMarket, comments: “The housing market continues to shake off external economic concerns demonstrating remarkable resilience, with good levels of activity and interest, particularly ahead of the end of the Stamp Duty concession.

“Recent base rate cuts have done much to provide a boost to confidence and activity in the market. With the Stamp Duty savings now behind us, further rate reductions from the Bank of England would be timely, providing much-needed impetus as the year progresses.

“The relative steadiness of house prices suggests that affordability is keeping a lid on values with buyers not prepared to pay inflated amounts. Sellers keen to take advantage of what is traditionally a busy spring market should seek advice from an experienced agent to take into account local market nuances and price accordingly if they wish to achieve a timely sale.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman says: “Although the small reduction in house prices noted last month has continued, activity still held up relatively well as the figures will not cover transactions which completed before the deadline to take advantage of the Stamp Duty concession.

“There’s no doubt that many purchases were brought forward as a result so we might have expected to see more impact in the data.

Worries about short-and-longer term economic prospects both here and abroad, have been driving that decision-making.”

“Buyers and sellers who missed out on the Stamp Duty savings had the choice to stay put, keep to previously-agreed terms and continue with their move or try to re-negotiate in an attempt to find some middle ground. The last option has proved the most popular in our offices.

“However, worries about short-and-longer term economic prospects both here and abroad, have been driving that decision-making (or lack of it) over the past few weeks at least.”