UK house prices have suffered their steepest decline in a year as the market cools after a buyer rush to beat stamp duty changes in England and Northern Ireland.
The average price of a property fell by 0.5% last month to £296,699, the steepest decline in value since March last year, according to Halifax.
It is the second consecutive month that house prices have fallen, as Britain’s biggest mortgage lender revised February’s decline from 0.1% to 0.2%.
The two months of falling house prices followed a record high in January as buyers rushed to complete deals before stamp duty increases that came into force this month.
“House prices rose in January as buyers rushed to beat the March stamp duty deadline,” said Amanda Bryden, the head of mortgages at Halifax. “However, with those deals now completing, demand is returning to normal and new applications slowing.”
In her October budget, the chancellor, Rachel Reeves, announced the end of temporary stamp duty cuts in England and Northern Ireland from April. Scotland and Wales set different taxes on house purchases.
From 1 April, first-time buyers in England and Northern Ireland have to pay tax on homes worth more than £300,000, down from £425,000, and the threshold for a reduced rate for first-time buyers will drop from £625,000 to £500,000.
The zero-tax stamp duty threshold that applies to all housing in England and Northern Ireland has dropped from £250,000 to £125,000.
“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,” Bryden said.
Economists and industry analysts expect house prices to continue to rise during 2025, as supply remains constrained and demand stays relatively stable, despite concerns over the UK economy’s momentum from the Bank of England.
Sales are expected to be helped by falling mortgage rates, and markets have priced in that there could be three more cuts of 0.25 percentage points in the base interest rate.
“Hopefully this month on month dip is only temporary,” said Nathan Emerson, the chief executive of Propertymark. “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.”
Mortgage rates have slightly dipped compared with last week, according to the latest market analysis by Moneyfacts.
The average two-year fixed mortgage rate is 5.32%, down from 5.33% on Friday. The average five-year fixed mortgage rate is 5.17%, a slight improvement on the 5.18% rate on Friday.
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Moneyfacts said that there were 6,945 residential mortgage products available, up from 6,936 on Friday.
However, the figures from Halifax, which is part of Lloyds Banking Group, suggest that momentum in the market is slowing.
In March, annual growth stayed steady at 2.8%, but this was down on 3.4% in December and 4.7% in November.
There is also growing uncertainty about the impact of Donald Trump’s sweeping tariffs on buyer and seller sentiment.
The US president’s global tariffs, announced last week on what he called “liberation day”, include a 10% tax on nearly all UK exports to the US, and 25% on steel and aluminium products and cars.
Karen Noye, a mortgage expert at Quilter, said: “The news of tariffs might start to spook would-be buyers as, once again, unpredictability seeps into the market.
“The enduring supply constraints continue to prop up prices, avoiding big drops, but the market’s trajectory will depend on how the UK economy is impacted by the new policies coming from the United States.”
