House prices in the UK experienced a slight decline in March, with annual growth also slowing, according to the latest Halifax data. This shift reflects ongoing economic uncertainties and regional disparities across the housing market.

March sees a dip in house prices

Halifax reports that average house prices fell by 0.5% in March, reversing a modest 0.3% increase recorded in February. The average property value now stands at £299,677. Over the year, annual growth slowed to 0.8%, down from 1.2% in March last year, signalling a cooling in the market’s momentum.

Regional variations remain pronounced

Differences in house price performance across the UK regions continue to be significant. Northern Ireland leads with the strongest annual growth, where average property prices rose by 8.7% to £224,809. Scotland also saw a solid increase of 4.4%, bringing average prices to £222,716.

Wales experienced a 1.6% rise over the year, with typical homes valued at £230,909. In England, growth was more concentrated in the northern regions. The North East recorded a 5% annual increase, with average prices at £184,119, while the North West saw a 3.1% rise to £247,442.

Conversely, southern markets showed declines. The South East experienced a 1.9% annual fall, with average prices dropping to £383,573. London’s housing market also softened, with values down 1.2% to £536,751.

Market slowdown linked to wider uncertainties

Amanda Bryden, head of mortgages at Halifax, attributes the recent market slowdown to uncertainty surrounding the conflict in the Middle East. She explains: “Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.”

Bryden adds that the impact on house prices will depend on how long these pressures last and their broader economic implications, including effects on unemployment. She notes, however, that the recent rise in UK mortgage rates has been more modest compared to the sharp increases seen during the 2022 mini budget turmoil.

Industry perspectives on the housing outlook

Nathan Emerson, CEO of Propertymark, highlights the shift in market sentiment: “We started the year with positivity in terms of seeing an uplift in the average number of viewings per available property, coupled with general consumer positivity regarding affordability. However, a lot has changed in a short space of time, with numerous sub 4% mortgage deals being withdrawn over the last few weeks as the wider economy adjusts to potential uncertainties.”

Karen Noye, mortgage expert at Quilter, emphasises the role of the ongoing conflict in shaping future market conditions. She says: “If tensions ease and energy-driven inflation pressures recede, mortgage rates could stabilise and drift lower again, supporting broadly flat prices. If the conflict drags on, persistently higher mortgage rates are more likely to translate into weaker activity and softer prices, particularly in more rate-sensitive parts of the market.”

Tom Bill, head of UK residential research at Knight Frank, notes that while mortgage rates may fall, the decline will be gradual. “Sentiment in the housing market will improve if the war stops, but its longer-term inflationary impact and weaker demand for UK government debt due to its tight financial headroom and apparent inability to cut spending means mortgage rates won’t snap back to where they were in February. This will keep demand and house prices in check this year.”

Jason Tebb, president of OnTheMarket, observes that despite the challenges, some buyers remain motivated: “The momentum created by several interest rate reductions over the past year and a half, combined with post-Budget clarity, continues to be in evidence on the ground, with needs-driven buyers and sellers who have put moves on hold focused on transacting. With further rate reductions on hold for the short term at least, and the threat of rate rises a concern the longer the conflict in the Middle East continues, those with competitive mortgage offers are keen to proceed before rates edge higher.”

What this means for landlords

For landlords, the current environment suggests a cautious approach to property investment and portfolio management. The slowing growth and regional disparities indicate that rental demand and property values may vary significantly depending on location. Areas with stronger price growth, such as Northern Ireland and parts of northern England, may offer more resilient rental markets.

Rising mortgage rates and inflationary pressures could also impact landlords’ borrowing costs and operational expenses. Staying informed about regional market trends and maintaining flexibility in rental pricing will be essential to navigate this period of uncertainty effectively.

Source: Based on reporting from Property118

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