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In March, average house prices across the UK declined by 0.5%, as reported by Halifax, the country’s largest mortgage lender. This decrease comes amid rising mortgage rates, influenced by the fallout from the conflict in Iran, which has dampened buyer demand. The current average property price stands at £299,677, while yearly growth rates have also slowed down.
This decline reverses the 0.3% price increase seen in February, prior to the onset of the conflict. The escalation in energy costs linked to the war raised concerns about escalating inflation, which has reduced hopes for any interest rate cuts in the near future. As a consequence, mortgage rates have surged, with many of the most affordable mortgage deals vanishing over recent weeks.
March experienced the most significant withdrawal of mortgage deals in a single day since the turbulent mini-Budget event in 2022, during the tenure of then-Prime Minister Liz Truss. However, Halifax noted that the recent rise in mortgage rates has not been as severe as the sharp increases seen four years ago.
Amanda Bryden, Halifax’s head of mortgages, explained that uncertainty surrounding the Middle Eastern conflict has contributed to the slowdown in the housing market. She said: “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.” When asked about the duration of weaker housing demand, Bryden added that it will “largely depend on how long-lasting these pressures prove to be and the wider implications for the economy and unemployment.
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