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UK house prices unexpectedly contracted in March as the stamp duty break came to an end, according to the lender Halifax, before leading rates for mortgages fell in April on the back of US tariffs.
The average house price fell 0.5 per cent between February and March, following a 0.2 per cent fall in the previous month, taking the average cost to £296,699, data showed on Monday.
House prices were up 2.8 per cent from March last year, unchanged from February.
The move contrasts with analysts’ expectations, who had forecast a 0.1 per cent month-on-month rise and a 3.5 per cent annual expansion, according to LSEG polling.
Amanda Bryden, head of mortgages at Halifax, said: “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.”
The stamp duty holiday, introduced in September 2022 when mortgage rates were rapidly rising, ended in March.
House purchases for first-time buyers completed from April 1 will start paying the levy on properties of £300,000 or more, rather than £425,000 at present, with similar changes for non first-time buyers.
The decline came before US President Donald Trump’s April 2 announcement of import tariffs on goods to the US, prompting global stocks to tumble and a fall in swap rates, which shape mortgage rates offered by lenders.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that if swap rates remained depressed, “lenders could respond with a flurry of five-year fixed rates starting with a ‘3’ as opposed to the current position of only one or two priced under 4 per cent”.
He said: “This would help affordability and give buyers renewed confidence to make their move.”
Riz Malik, Mortgage Broker at financial adviser R3 Wealth, said: “If borrowing costs do come down, the house price decline looks set to reverse as market activity increases.”
However, Ashley Webb, UK economist at Capital Economics, said lenders “will probably look through the sharp drop in market interest rates until the dust from the US tariffs settles”.
Bryden of Halifax expects a “modest rise” in house prices this year, helped by the Bank of England cutting interest rates further and wages still accelerating.
However, she noted that “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”.
Halifax data showed that Northern Ireland continues to record the strongest annual property price growth of any nation or region, rising by 6.6 per cent in March to an average of £206,620.
London saw the slowest annual house price growth at 1.1 per cent in March and remained the most expensive market with average house prices of £543,370.
Figures published last week by the lender Nationwide showed house prices stalled in March. The BoE reported last week that mortgage approvals marginally declined in the first two months of the year.
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