The Halifax House Price Index in the UK rose by 2.8% year-over-year (yoy) in March 2025, unchanged from a slightly revised figure in February, marking the slowest growth since July 2024. This reflects a cooling in the housing market, as the strong price gains seen earlier in the recovery from the pandemic begin to moderate.
UK house price growth holds steady in March
On a monthly basis, however, house prices fell by 0.5%, which missed market consensus that had expected a 0.2% increase and represented a sharp acceleration from the revised 0.2% decline in the previous month. It was the sharpest monthly drop in a year, signaling potential challenges in the housing market as buyers grapple with economic headwinds.
Despite the monthly decline, over the quarter, the index rose by 0.5%, reflecting more stable, albeit subdued, growth. The average property price fell to £296,699 in March, down from £298,602 in February. This slight dip in the average price is indicative of broader market trends, where high borrowing costs, economic uncertainty, and limited property supply continue to weigh on overall housing demand, particularly for first-time buyers and those looking to upgrade to more expensive properties.
Expert comment
Amanda Bryden, Head of Mortgages at Halifax, commented on the ongoing dynamics in the housing market, noting that despite the challenges, house sales activity picked up in March. She highlighted that more house sales were completed in March than in January and February combined, including the busiest single day on record. This surge in activity, however, could be attributed to seasonal factors and a rush to secure property purchases before anticipated interest rate cuts.
Bryden acknowledged the obstacles still facing potential buyers, particularly the impact of higher borrowing costs, which have made it more difficult for many to secure financing for home purchases. Furthermore, the continued limited property supply, coupled with economic uncertainty stemming from global trade tensions and domestic inflationary pressures, are also contributing to a more cautious market outlook. However, Bryden remained optimistic, stating that with further base rate cuts expected and continued wage growth, mortgage affordability should improve over time. This, in turn, could support a more favorable environment for buyers and encourage more activity in the housing market.
Halifax anticipates a modest rise in house prices
As a result, despite the challenges faced by the market in the short term, Halifax anticipates a modest rise in house prices over the course of the year. The pace of this increase, however, is expected to be more gradual compared to previous years, as the broader economic landscape continues to evolve. The interplay between interest rates, wage growth, and housing supply will likely remain the key factors influencing market sentiment and price trends in the months ahead.
