British House Prices Fall 1.0% in March, First Drop Since September 2023: Halifax

British house prices fell 1.0% in March, marking their first decline since September 2023, according to data from mortgage lender Halifax. The drop comes amid continued high interest rates and follows five consecutive months of price increases.

Halifax, a part of Lloyds Banking Group, stated that while the decrease was not entirely unexpected, it leaves prices just 0.3% higher than a year earlier. This is below both the median forecast for a 1.45% rise in a Reuters poll of economists and the 1.6% increase reported by Nationwide earlier in the week.

The housing market in Britain has shown signs of recovery in recent months after a slump in late 2022. Factors contributing to this recovery include rising wage growth outpacing inflation and the possibility of rate cuts by the Bank of England.

Despite the positive momentum, Halifax director Kim Kinnaird expressed caution, noting that financial markets have become less optimistic about the timing and extent of rate cuts. This has led to a stall in the decline of mortgage rates, which had previously fueled market activity.

Economists at consultants Capital Economics predict that mortgage rates will remain relatively high in the coming months, hovering around 5%. This is expected to dampen demand and prevent further increases in house prices.

Overall, house prices in the UK are still approximately 20% higher than pre-pandemic levels, reflecting a trend seen in many other advanced economies. Halifax noted that prices have remained relatively stable since the spring of 2022.

Looking ahead, investors anticipate that the Bank of England will begin cutting rates in June or August, with rates expected to fall to around 4.5% by the end of the year from the current rate of 5.25%. This forecast will continue to influence the dynamics of the housing market in the months to come.