UK house prices dropped less than expected in March, according to the latest figures from lender Halifax.
House prices fell 1.6% on the month compared to a 5.9% increase in February. Still, this was better than the 2.4% decline expected.
On the year, prices rose 3.2% in March following a 2.8% jump the month before and versus expectations for a 2.3% increase.
Halifax managing director Russell Galley said the monthly drop partly corrects the significant growth seen in February and again demonstrates the risk in focusing too heavily on short-term, volatile measures.
“Industry-wide figures show that the number of mortgages being approved remains around 40% below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.
“The more stable measure of annual house price growth rose slightly to 3.2% and is still within our expectation for the year. The need to build up a deposit before getting a mortgage is still a challenge for many looking to buy a property. However, the combined effect of fewer houses for sale and fewer people looking to buy continues to support prices in the long-term.
“These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London, meaning that we continue to expect subdued price growth for the time being.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said prices were still on a slowly rising path.
“The pick-up in the three-month average rate of year-over-year growth in Halifax's measure of house prices goes against the grain of all other measures that we track, but a sustained period of falling house prices still isn't on the cards. Low unemployment and stable mortgage rates are sustaining housing demand, despite Brexit uncertainty.
“Looking ahead, business surveys are consistent with a stable unemployment rate, while the willingness of the EU to grant a long Article 50 extension has reduced the no-deal Brexit tail risks that have depressed consumers' confidence. We still think the MPC will raise Bank Rate before the end of this year, but the impact on mortgage rates looks set to be modest, given that banks are less reliant on wholesale funding than in the past and increasingly price loans off deposit rates, which will rise only modestly alongside Bank Rate. Accordingly, we still expect year-over-year growth in the official measure of house prices to stabilise at about 1.5% this year.”