Average house prices across the UK increased by 0.8% in March, following rise of 1.2% in February, according to the latest analysis by Halifax.
As a result, the typical property now costs £287,880. This is up from £285,660 in February but is still around 2% below the peak reached last August, the mortgage lender said.
House prices rose in all UK nations and regions in March, although the annual rate of growth continued to slow in most areas.
“On an annual basis, house prices were 1.6% higher than a year ago, slowing from 2.1% in February,” explained Kim Kinnaird, director of Halifax Mortgages. “This is the weakest rate of annual growth in nearly three-and-a-half years (October 2019), having fallen markedly since June 2022’s peak of 12.5%.
“However, overall these latest figures continue to suggest relative stability in the housing market at the start of 2023 and align with many other recent industry surveys and data. This has been characterised by a partial recovery in activity and transactions, especially when compared to the significant drops seen at the end of last year, with latest Bank of England data showing mortgage approvals rising for the first time in six months.”
The number one factor behind this improved picture is an easing of mortgage rates.
“The sudden spike in borrowing costs that we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry a typical five-year fixed rate deal (75% LTV) is down by more than 100 basis points over the last few months,” Kinnaird said.
At the same time, the labour market, a key indicator for house prices, remains strong and pay growth continues to look robust.
However, Kinnaird warned that mortgage costs are unlikely to get significantly cheaper in the short term and the performance of the housing market will continue to reflect the “new norms” of higher borrowing costs and lower demand.
Consequently, Halifax still expects to see a continued slowdown over the course of this year.
