The latest data from Halifax indicates that average house prices in the UK fell by 0.5% from February to March 2023. This contraction takes the average property price to £296,699, following a smaller decline of 0.2% observed in February.

Yearly Trends and Analyst Expectations

On a year-over-year basis, house prices remain 2.8% higher than in March of the previous year, showing stability when compared to February’s figures. However, this recent decline contradicts analysts’ predictions, which had anticipated a modest rise of 0.1% month-on-month and a more significant 3.5% increase on an annual basis, according to polling conducted by LSEG.

Factors Influencing the Market

Amanda Bryden, head of mortgages at Halifax, commented on the situation: “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 conclusion of the stamp duty holiday, which was introduced in September 2022 amidst rising mortgage rates, likely played a significant role in this downturn. Beginning on April 1, 2023, first-time buyers will be subject to the tax on properties priced at £300,000 or above, a decrease from the previous threshold of £425,000.

Continuing Challenges in the Market

Bryden also noted that potential buyers are facing additional hurdles, including elevated borrowing costs, a shortage of available properties, and an uncertain economic landscape inhibiting market activity. Recent data from Nationwide echoed these findings, indicating a stall in house prices for March.