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UK house prices rise for third straight month to £287,880

House prices LONDON, UNITED KINGDOM - 2023/03/31: A Foxtons estate agency 'Sold' sign is seen in central London, as UK house prices fall at the fastest annual rate since 2009. (Photo by Vuk Valcic/SOPA Images/LightRocket via Getty Images)
House prices rose by 0.8% from February, Halifax said. Photo: Getty (SOPA Images via Getty Images)

Average UK house prices have risen for the third month in a row, taking the typical UK property price to £287,880 in March.

Average house prices increased by 0.8% in March, following a 1.2% rise in February, according to Halifax.

On an annual basis, house prices were 1.6% higher than a year ago, slowing from 2.1% in February and the weakest rate of annual growth since October 2019.

Kim Kinnaird, director at Halifax Mortgages, said: “The principal factor behind this improved picture has been an easing of mortgage rates. The sudden spike in borrowing costs that we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry a typical five-year fixed rate deal (75% LTV) is down by more than 100 basis points over the last few months.

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Prices have fallen markedly since June 2022’s annual peak of 12.5%, although Halifax said the latest figures pointed to relative stability in the housing market so far in 2023.

Predicting exactly where house prices go next is more difficult, with Kinnaird warning about uncertainty around interest rates.

She added: “Predicting exactly where house prices go next is more difficult. While the increased cost of living continues to put significant pressure on personal finances, the likely drop in energy prices – and inflation more generally – in the coming months should offer a little more headroom in household budgets.

“While the path for interest rates is uncertain, mortgage costs are unlikely to get significantly cheaper in the short-term and the performance of the housing market will continue to reflect these new norms of higher borrowing costs and lower demand. Therefore, we still expect to see a continued slowdown through this year.”

Read more: Houses being sold at a £14,000 discount, Zoopla finds

Northern Ireland continues to report the strongest annual growth in house prices of 4.9% (average house price of £186,459), followed by the West Midlands (3.8%, average property price of £248,308).

In Wales the rate of annual property price inflation has slowed to 1% (average house price of £213,959). Similarly in Scotland, the annual rate of growth fell to 2.3% (average property price of £199,853).

Average house prices in London are up very slightly on this time last year (0.1%) with the typical property now costing £537,250.

Adam Smith, director at Northampton-based mortgage broker Alfa Mortgages said inflation and levels of uncertainty around interest rates will play their part.

He said: "A decline in consumer confidence could lead to a sharper decrease in the value of UK bricks and mortar, but the extent of this remains uncertain and is the million-dollar question on everyone's mind."

Jamie Minors, managing director at Norwich-based estate agents, Minors & Brady said house prices are still going through a "period of correction".

He added: "With mortgage rates steadily reducing and consumer confidence returning after the disastrous Kwarteng/Truss administration, we are seeing strong levels of demand matching good levels of supply.

"Unemployment is still incredibly low, so as long as mortgage rates don't suddenly rise and people still have their jobs, buyers will continue to purchase, resulting in prices holding without further big reductions and a rally upwards in 2024."

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