House prices fell 1.6% in March after ‘eye-watering’ record February rise but still up year-on-year

House prices fall in March after ‘eye-watering’ record rise in February- but they’re still up 3.2% on a year ago

  • February’s record 5.9% house price bounce proved short-lived 
  • However prices are still up 3.2% year-on-year and 1.6% quarterly
  • Commentator points to Brexit uncertainty as cause of the soft numbers

February’s record 5.9 per cent house price bounce was short-lived, with the latest data finding property prices slipped 1.6 per cent in March.

However, prices in the three months to March were up 3.2 per cent compared to the same period last year, with the average house price now sitting at £233,181, according to the latest Halifax House Price Index.

The lender’s managing director, Russell Galley, called the fall in March a partial correction of February’s record jump in prices, saying it demonstrated ‘the risk of focusing too heavily on short-term, volatile measures’.

Halifax’s latest House Price Index found prices in March fell 1.6% compared to February’s record rise. Its managing director called March’s fall a partial correction

The 5.9 per cent rise, the highest recorded since the index began in 1983, was attributed by commentators to the shortage of homes on the market. 

Andrew Montlake, director of Coreco, said the February data underlined that the lack of supply ‘could prove the property market’s trump card’.

Jonathan Hopper, the managing director of Garrington Property Finders, had said February’s figures ‘shouldn’t be seen as an omen of things to come.’ 

His pronunciation that ‘better clues lie in the monthly and quarterly growth rates, which have returned to type – steady and sustainable rather than stellar’, does appear borne out by the latest figures.

As well as being up 3.2 per cent year-on-year, house prices in the first three months of 2019 were up 1.6 per cent compared to the last quarter of 2018.

February's record 5.9% rise in house prices was described as 'eye-watering and frankly bizarre' by one commentator, but the latest figures suggest the market has corrected itself

February’s record 5.9% rise in house prices was described as ‘eye-watering and frankly bizarre’ by one commentator, but the latest figures suggest the market has corrected itself 

Galley added: ‘The more stable measure of annual house price growth rose slightly to 3.2 per cent 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.’

Howard Archer, chief economic adviser at EY ITEM Club, said: ‘A marked correction in house prices was only to be expected in March following the eye-watering and frankly bizarre record 6 per cent month-on-month jump in prices reported in February.

‘The overall impression is that the housing market is currently soft as it is being hampered by challenging conditions with buyer caution currently being reinforced by heightened Brexit and economic uncertainties – although there are significant variations across regions with the overall picture being dragged down by the weakness in London and the South East.’