House prices fall for first time in six months - Halifax
By Michele Maatouk
Date: Friday 05 Apr 2024
(Sharecast News) - UK house prices fell for the first time in six months in March as the drop in mortgage rates stalled, according to figures released by Halifax on Friday.
House prices declined by 1% on the month in March, following five months of growth and a 0.3% increase in February.
On the year, house price growth eased to 0.3% in March from 1.6% a month earlier.
The average price of a home stood at £288,430, down from £291,338 in February.
Kim Kinnaird, director of Halifax Mortgages, said: "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. 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.
"Financial markets have also 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 market activity around the turn of the year."
Imogen Pattison, assistant economist at Capital Economics, said: "Looking ahead, we expect mortgage rates to remain higher than in January and February and hover at just under 5% over the coming months, which will subdue demand and prevent further gains in house prices.
"But given public house price expectations are positive, we doubt prices will fall much either. And if we are right to think that Bank Rate will be cut further than most forecasters anticipate, mortgage rates will fall to below 4% by this time next year, giving house prices a fresh boost."
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