UK house prices increased unexpectedly last month, the latest data from Halifax shows, bucking the falling trend elsewhere in the property market.

The latest house price figures suggest that the market may be boosted by the recent easing of mortgage borrowing rates and the tight labour market.

House prices increased by 0.8% between February and March, data showed on Thursday, which surprised many economists, with most experts expecting property prices to fall.

Property prices in March were up 1.6% compared with the corresponding month last year, down from a 2.1% expansion registered in February and the weakest rate since October 2019.

Halifax’s house price figures with data from Nationwide, which recorded a 3.1% annual decline in March, the steepest drop since 2009.

Industry reactions:

Matthew Thompson, head of sales at Chestertons, said: “House hunters may not be seeing the drop in London property prices that they had hoped for. In March, the average price at which properties sold via our branches stood at £1.37mn with neighbourhoods such as Putney, Fulham and Barnes being in particularly high demand with buyers.

“Since the start of this year, many homeowners put their sale on hold to observe the market which has led to demand further exceeding the number of properties available for sale. This is resulting in properties keeping their value with little room for price negotiation. Throughout March, the majority of London sellers have therefore been able to secure their asking price or even receive higher offers from buyers.”

Nathan Emerson, CEO of Propertymark, commented: “Estate agents are seeing a very steady picture. Whilst winter saw a slight decline in activity and therefore prices, spring brought new activity. This trend is normal as the market flows with seasonal changes in buyer behaviour.

“We have plenty of homes coming to the market which shows sellers are confident and that’s the key. Prices have adjusted to rising interest rates curbing affordability, but as we head into April and May, prices may pick up as more buyers will be on the move.”

Nicky Stevenson, MD at Fine & Country, remarked: “Spring has started strongly with a robust set of house price results, and this coincides with a welcome uptick in demand as mortgage rates continue to ease.

“These are the kind of figures that will give sellers confidence that now is a good time to list their property, though many are also being realistic about pricing and buyers’ expectations for a negotiation.

“All the signs point to the property market emerging from the challenges it has faced since the Mini Budget, with the weather set fair for a strong showing over the next few months, in what is traditionally a very busy period.

“Although demand is increasing, so is housing stock. We’re starting to see signs of a much healthier market in terms of supply and demand than we saw during the mad rush over the last two years.

“In some areas there are many more properties for sale than this time last year when the market was still in the middle of a historic boom in demand.”

Iain McKenzie, CEO of The Guild of Property Professionals, said: “The slowdown in house prices seems to have levelled off in recent months, with figures showing modest growth despite gloomy forecasts towards the latter end of last year.

“The picture is still mixed as these figures show a brighter prospect for sellers than some other measures of house prices.

“Sales are holding steady and many estate agents are now enjoying the benefit of having more properties on their books following a shortage of stock in the last year. This is good news for buyers, as it gives them more choice and a better chance at securing the right home.

“Despite a significant fall at the end of last year, the price of an average home is now creeping back up to almost £288,000. While this is good news for sellers, many first-time buyers will be disappointed to see prices increase at a time when other household costs are increasing too.

“Buyers must be reassured that now is still a good time to buy, especially as rent levels continue to rise to unaffordable levels in many areas.”

Carl Howard, Group CEO of Andrews, commented: “A second straight monthly property price rise suggests a spring bounce, led by sellers who have stepped up and kept this market ticking over.

“They’ve had a few months now to adjust their eyes to a gloomier outlook, and a realistic attitude on prices is helping grease the wheels and get more deals over the line.

“Meanwhile demand for properties is creeping up from a low base as buyers warm to a market moving in their direction and make more enquiries.

“Although interest in homes is down from the same time last year, sales are being supported by a boost in supply, particularly in cheaper price brands. Mixed with a surge in rental prices, this should also encourage more buyers into the market.

“There are still storm clouds lingering, particularly around affordability, but lending rates are continuing to soften, meaning less of a jolt for first-time buyers and owners whose current fix is coming to an end.”

Jason Tebb, CEO of OnTheMarket.com, commented: “Average property prices held steady in March, further evidence of the housing market continuing to rebalance in a calm, measured way.

“Our own data supports this, with improvements in both buyer and seller sentiment as the market enters the traditionally busier spring period. Even with rising interest rates and inflation putting pressure on household finances, there is a growing feeling that both are close to their peak, if not there already.

“People need to move regardless, even if the market is more challenging, but sellers need to price realistically and accurately under the guidance of an experienced local agent in order to achieve a timely and successful outcome.”

Simon Gerrard, MD of Martyn Gerrard, added: “The first quarter of 2023 was undoubtably affected by the knock-on effects of last year’s disastrous ‘mini-budget’ and the turbulence in the wider economy that it caused, but I would argue that the headlines and figures ringing alarm bells over house price growth do not accurately reflect the levels of activity that we have seen on the ground.

“We’ve seen high volumes of enquiries and increasing buyer confidence, especially as some of the large lenders have now reduced mortgage rates, even despite the Bank of England raising the base rate. The figures released today are based on Halifax mortgage transactions and therefore likely better account for this trend in mortgage rates, and I’m hopeful as we head into Spring that we’ll see house prices return to growth soon.

“Buyers should tune out the negative noise around price growth and keep it front of mind that purchasing a house is a long-term investment. They should focus less on the near-term fluctuations in the market and more on long-term value, which I guarantee will follow an upward trend over the next five to ten years. Lulls in buyer confidence have historically proven to be minor blips in the bigger picture, and this is likely the case in the current market.

“The real challenge we are facing continues to be the lack of available supply and a dire scarcity of new development, which has likely prevented sharper drops in growth in recent months. The Levelling up Secretary himself recently remarked on the government’s utter failure to fix the housing system. If his pledge to fix the problem is going to be successful, it must be led by support for new development, and the government must stop pandering to NIMBYs and local councils who are opposed to housebuilding.

“I hope that the latest housing minister is able to step up to the task and deliver, given the last five haven’t even made it past the six-month mark. If the government doesn’t get serious about housing now, the next generation of home buyers in this country will simply find there are no affordable homes to buy.”