UK house prices fell in March, as the housing market lost momentum amid uncertainty over the conflict in the Middle East and the impact on the economy and interest rates.<\/p>\n
Figures from Halifax, which is part of Lloyds \u2013 Britain\u2019s biggest mortgage lender \u2013 showed property prices dipped by 0.5% in March compared with a month earlier. As a result, the average price of a home slipped back below \u00a3300,000, to \u00a3299,677, after first crossing the milestone<\/a> in January.<\/p>\n The pace of annual property price growth also eased to 0.8%, down from 1.2% the previous month, suggesting a slowdown in the housing market<\/a> at the start of the traditional spring selling season.<\/p>\n Halifax said uncertainty over the conflict in the Middle East had dampened the \u201cinitial momentum in the market seen at the start of the year\u201d. Concerns about higher energy prices<\/a> have pushed up inflation expectations, which has in turn led to a rise in mortgage rates.<\/p>\n Expectations that the Bank of England could raise interest rates several times this year has driven up the cost of fixed-rate mortgages. However, City traders cut their forecasts for rate rises on Wednesday morning after the US and Iran agreed to a two-week conditional ceasefire<\/a> on Tuesday night, with only one quarter-point rise now fully priced in for this year.<\/p>\n The choice of mortgage deals shrank in recent weeks<\/a>, with hundreds of mortgage products pulled from the market. The average two-year fixed residential mortgage rate also moved upwards to 5.84% by the end of March, the highest since July 2024.<\/p>\n UK house prices dropped by 0.5% in March. Photograph: Justin Tallis\/AFP\/Getty Images<\/p>\n \u201cThe effect on house prices will largely depend on how long\u2011lasting these pressures prove to be and the wider implications for the economy and unemployment,\u201d said Amanda Bryden, the head of mortgages at Halifax.<\/p>\n \u201cMortgage rates are a key factor for buyers, particularly those getting on the ladder for the first time, who are already balancing the challenge of saving a deposit, with the cost of borrowing.\u201d<\/p>\n Many prospective house buyers are expected to keep a close eye on mortgage rates before making a decision on whether to go ahead with a purchase. The recent increase in mortgage rates has, however, been more modest<\/a> than the sharp rises seen after Liz Truss\u2019s mini-budget in 2022<\/a>.<\/p>\n