Average UK house prices fell in March as rising mortgage rates and global uncertainty weighed on demand, according to new figures.
Data from lender Halifax shows prices dropped by 0.5% during the month, bringing the average property value to £299,677. The fall follows a 0.3% increase in February and marks a slowdown in annual growth.
The decline comes amid economic uncertainty linked to the conflict involving Iran, which has driven up energy prices and increased concerns about inflation. As a result, expectations that interest rates might fall this year have weakened, contributing to higher mortgage costs.
Borrowing rates have risen sharply in recent weeks, with many of the lowest-priced mortgage deals withdrawn from the market. Lenders have become more cautious, reflecting the uncertain outlook.
Amanda Bryden, head of mortgages at Halifax, said: “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.”
Figures from Moneyfacts indicate that the average rate on a two-year fixed mortgage has risen from 4.83% at the start of March to 5.90%, the highest level since July 2024.
Ms Bryden added that the outlook for the housing market would depend on how long these pressures persist and their wider impact on the economy and employment.
Adam French, head of consumer finance at Moneyfacts, told the BBC: “The longer the ceasefire holds and markets calm, the more the mortgage market will stabilise, and rates could even begin to edge lower.
“But for now, it’s more likely to slow or pause increases rather than trigger any sharp falls.”
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