The average house price in the UK dropped by 0.5% month-on-month in March, having fallen by 0.2% in February, Halifax has revealed.

The bank’s latest house price index showed that the average property price in the UK stood at £296,699, which is an annual increase of 2.8%.

Head of mortgages at Halifax, Amanda Bryden, said: "House prices rose in January as buyers rushed to beat the March stamp duty deadline. However, with those deals now completing, demand is returning to normal and new applications slowing. Our customers completed more house sales in March than in January and February combined, including the busiest single day on record. Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.

"Looking ahead, potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and an uncertain economic outlook.

"However, with further base rate cuts anticipated alongside positive wage growth, mortgage affordability should continue to improve gradually, and therefore we still expect a modest rise in house prices this year."

Halifax revealed that Northern Ireland continued to record the strongest annual house price growth of any UK region, with prices increasing to 6.6% year-on-year in March to an average price of £206,620.

House prices in Scotland (£213,750) and Wales (£227,332) jumped by 4.3% and 3.7% respectively.

In England, Yorkshire and Humberside was the best performing region, with house prices increasing by 4.2% year-on-year to £215,807.

Although London saw the slowest annual house price growth in the year to March, increasing by 1.1%, it retained the top position for the highest average house price in the UK at £543,370.

Personal finance analyst at Bestinvest, Alice Haine, concluded: "The UK economy is already stuttering under the weight of higher taxes on businesses and consumers, and any further strain on household finances could have an even further dampening effect on output.

"There’s every possibility that the BoE may look to lessen the recession risk with another rate cut in May, provided it views any price rises resulting from the tariff shock as temporary. This could bode well for mortgage rates – though there are no certainties at this stage.

"Property prices were already expected to be more subdued in the wake of the stamp duty threshold change deadline but now that global uncertainty is back with a bang, buyers have more than just a higher tax bill to contend with. While some buyers might pause moving plans to see how the turbulence plays out, those keen to push ahead with a purchase should be prepared to negotiate."

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