UK house prices unexpectedly fell in February as economic uncertainty weighed on the market.
The latest Halifax house price data showed the average property price dipped by 0.1% in February to £298,602 from £298,815 the previous month, following a period of tentative recovery in the housing market.
Annual growth remained steady at 2.9%, Halifax said.
Amanda Bryden, head of mortgages at Halifax, said of the figures: “February’s figures highlight the delicate balance within the UK housing market. While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.
“That may help to explain why growth in first-time buyer property prices eased in February, falling to +2.4%, in contrast to homemover price inflation which accelerated, reaching +3.7%.”
However, while house price growth has slowed overall, Bryden said market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience amongst buyers in the face of higher borrowing costs.
“While those affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests property prices will continue to rise this year, albeit at a more measured pace compared to last year,” she added.
Holly Tomlinson, financial planner at Quilter, said: “The housing market has been banking on rate cuts this year, but if inflation stays sticky borrowing costs could stay higher for longer, slowing house price growth or even pushing prices down in real terms.
“The next few months will be crucial in setting the direction of the housing market. If inflation can be controlled and the Bank of England presses ahead with rate cuts, the housing market could see renewed momentum. However, persistent inflation, higher mortgage rates, and global trade tensions could dampen demand and keep price growth subdued.
“For now, buyers and sellers should remain realistic. Mortgage rates remain well above their historic lows, and while affordability is slowly improving, any recovery in house prices will be slow and uneven. Those considering moving should keep an eye on both interest rate expectations and global events, as they will play a bigger role than ever in shaping the cost of borrowing in the UK.”
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