HALIFAX says house prices fell 0.5% in March as experts bemoan “Donald Trump single-handedly turning the UK property market on its head”.
House prices reduced by 0.5% in March, following a 0.3% rise in February, with the average property price now £299,677 in the UK, Halifax’s House Price Index has revealed.
The annual growth to house prices of 0.8% has also slowed, down from 1.2% in February.
House prices continue to vary by region, with stronger growth in the North and more subdued conditions in the South.
Northern Ireland continues to lead UK annual house price growth, with average prices up 8.7% over the past year to £224,809. Scotland also recorded strong growth, rising 4.4% annually to an average price of £222,716.
Wales saw a more modest increase of 1.6% on an annual basis, taking the typical home value to £230,909.
In England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 5% over the year to £184,119, while the North West recorded annual growth of 3.1%, with the average home now costing £247,442.
By contrast, the southern markets continue to see prices ease. The South East led declines, with prices down 1.9% year‑on‑year to £383,573, while London saw average values fall by 1.2% to £536,751.
Donald Trump single-handedly turning the UK property market on its head
Amanda Bryden, Head of Mortgages at Halifax, said “the market has lost some momentum as spring begins”.
She added: “The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East. 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.
“The effect on house prices will largely depend on how long‑lasting these pressures prove to be and the wider implications for the economy and unemployment. Mortgage 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.
“As a result, many are likely to watch movements in mortgage rates closely, before making a decision on any home purchase. In this environment, professional advice can play an important role in helping people understand their options and make informed decisions that are right for their individual circumstances.
“However, the recent increase in UK mortgage rates has been more modest than the sharp rises seen during the mini budget of 2022. Further, many households will already be on fixed deals, protecting them from the latest rate rises. Taking all this into account, house prices may prove resilient, even if uncertainty weighs on market activity in the near term.”
Brokers and property experts said the property market slump was due to rising mortgage costs caused by US President Donald Trump’s war in Iran leading to a spike in oil prices. Though the ceasefire agreed overnight offers some hope.
Mortgage rates shot up and sentiment went the other way
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, said confidence in the housing market is weak.
She added: “How long-lasting this conflict is will be integral to the performance of the property market in the months ahead. If last night’s ceasefire holds and an end to the war is achieved, things may start to improve but confidence for now at least remains weak.
“The momentum in the market at the start of the year was less dampened than destroyed by events in the Middle East.”
Zaman Sheikh, Director of Northwood Chelmsford and WN properties estate and lettings agents in Shenfield and Chelmsford, said mortgage rates have risen in the past month.
He added: “House prices fell in March as mortgage rates shot up and sentiment went the other way. All the good progress at the start of the year was rapidly undone due to the war in Iran changing the entire economic landscape.
“I’m not sure there has ever been a month where interest rate expectations turned so sharply. At the end of February, things were looking up but, for now at least, that confidence has evaporated as people factor in the increased cost of homeownership due to higher borrowing costs.
“Despite the two-week ceasefire and reopening of the Strait of Hormuz, many would-be buyers and sellers will likely now sit and wait rather than move ahead with their plans given the level of uncertainty about the path of interest rates and inflation. The climate remains uncertain.”
The overnight ceasefire offers some hope
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, blamed Donald Trump for the downturn in the property market.
He added: “As expected, the house price growth we saw in February was reversed in March as the impact of the war in Iran fed through. Donald Trump single-handedly turned the entire UK mortgage and property market on its head.
“The one silver lining of the current market, where confidence is low, is that it is a strong opportunity for first-time buyers to negotiate very hard as they hold all the cards right now. But many may wait to see if mortgage rates start to edge down again after last night’s ceasefire. Things are less uncertain than they were 24 hours ago, but sentiment is still low.”
Steven Greenall, Mortgage and Protection Advisor at Dunmow-based Protect & Lend, said interest rates are feeding through into lower house prices.
He added: “Just as the start to the year was looking favourable for house price growth, the US war with Iran triggered a sudden surge in interest rates, which took the momentum out of the market almost immediately.
“The overnight ceasefire offers some hope but the situation remains fluid. For now, we are in very much a buyers’ market, so why not use the opportunity to put in a cheeky offer or two and gauge the motivation and needs of the vendor?”
