Halifax: UK house prices drop as Stamp Duty thresholds fall

Average house prices fell on a monthly basis in March and annual growth flattened as the market adjusted to Stamp Duty changes, the latest Halifax data shows.

The Halifax House Price Index for March shows average prices fell 0.5% on a monthly basis, the second consecutive monthly drop, to £296,699 on average.

The annual rate of growth remained at 2.8%, unchanged from February.

It comes as buyers and sellers will have been adapting to lower Stamp Duty thresholds that came in at the end of March.

Northern Ireland continued to record the strongest annual property price growth of any nation or region, rising by 6.6% in March.

Scotland recorded the second strongest house price growth, increasing by 4.3% last month.

Average property prices in Wales were up 3.7% in March to an average of £227,332.

In England, average house prices rose by the most in Yorkshire and Humberside, up 4.2% year on year.

London saw the slowest annual house price growth at 1.1% in March. 

Amanda Bryden, head of mortgages at Halifax, said:

“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. Our customers completed more house sales in March than in January and February combined, including the busiest single day on record. Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.

“Looking ahead, potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and an uncertain economic outlook.

“However, with further base rate cuts anticipated alongside positive wage growth, mortgage affordability should continue to improve gradually, and therefore we still expect a modest rise in house prices this year.”

Commenting on the data, Tom Bill, head of UK residential research at Knight Frank, said:

“As buyers adapt to higher rates of Stamp Duty, the positive news is that US trade tariffs announced last week have put downwards pressure on borrowing costs as markets price in an economic slowdown.

“The Bank of England is now expected to cut rates three times this year rather than twice. The risk is that tariffs ultimately prove to be inflationary and the spillover effects mean upwards pressure on mortgage costs in the UK. For now, the spring market feels steady although the prospect of a tax-raising autumn Budget will throw more uncertainty into the mix later this year.”

Nathan Emerson, chief executive of Propertymark, said:

“This house price reduction will be a huge disappointment to many sellers hoping to make gains on a house sale to climb up the housing ladder, but it could also be an opportunity for aspiring homeowners to take advantage of the slight reduction in house prices and take their first step, or next step, onto the housing ladder.  

“Hopefully this month-on-month dip is only temporary. The spring and summer months normally spur on a flurry in housing activity, especially at a time when there are many competitive mortgage deals out there right now as a result of the reduction in interest rates last year. 

“However, with housing playing a vital role in the UK economy, international events could jeopardise the Bank of England’s target of a 2% inflation rate, which may thwart their ambitions to reduce interest rates further. The housing market must remain stable ahead of the Bank of England’s next decision on interest rates in May.” 

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