UK house prices slipped 0.5% in March, bringing the average property value to £299,677, according to the latest Halifax House Price Index.
Annual growth has also cooled, falling to 0.8% from 1.2% in February, suggesting the market is losing momentum heading into spring.
Halifax pointed to uncertainty around the Middle East conflict as a key factor, with concerns over higher energy prices feeding through into rising inflation expectations and pushing mortgage rates higher, dampening hopes of interest rate cuts this year.
“The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East,’ said Amanda Bryden, Head of Mortgages, Halifax.
“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.
“The effect on house prices will largely depend on how long‑lasting these pressures prove to be and the wider implications for the economy and unemployment.”
The impact of the war in the Middle East will be a real disappointment for homeowners who will have welcomed a strong start to the year, only for interest rate hikes to enter the conversation and suck the life out of the market.
“We are at an important intersection where we must clearly acknowledge future challenges ahead. We started the year with positivity in terms of seeing an uplift in the average number of viewings per available property, coupled with general consumer positivity regarding affordability,” said Nathan Emerson, CEO of Propertymark.
“However, a lot has changed in a short space of time, with numerous sub 4% mortgage deals being withdrawn over the last few weeks as the wider economy adjusts to potential uncertainties.