The average house price in the UK has dropped by £2,900 month-on-month, with the typical UK home now costing £288,430, Halifax has found.

In the lender’s house price index (HPI) for March, it revealed that property prices increased 0.3% annually, after jumping by 1.6% in February.

Furthermore, house prices are up by 2% on the previous quarter.

Director at Halifax Mortgages, Kim Kinnaird, said: "That a monthly fall should occur following five consecutive months of growth is not entirely unexpected particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022. Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs.

"Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates. This means the housing market is still to fully adjust, with sellers likely to be pricing their properties accordingly."

In terms of nations and regions, Northern Ireland has remained the strongest performer, with house prices increasing by 4.3% year-on-year. The average cost of a home in the nation now sits at £194,743.

Property prices also increased in Wales and Scotland by 1.9% and 2.1% respectively.

The North West saw the largest growth in house prices in England, jumping by 3.7% annually to £232,315, with Eastern England recording the biggest decline of 0.9%, falling to £330,627.

London continues to have the highest house prices in the UK, increasing by 0.4% over the past year to £539,917.

Kinnaird added: "The broader picture is that house prices are up year-on-year, reflecting the opposing forces of an easing cost of living squeeze – now that pay growth is outpacing general inflation – and relatively high interest rates. Taking a slightly longer-term view, prices haven’t changed much over the past couple of years, moving in a narrow range since the spring of 2022, and are still almost £50,000 above pre-pandemic levels.

"Looking ahead, that trend is likely to continue. Underlying demand is positive, as greater numbers of people buy homes, demonstrated by recent rises in mortgage approvals across the industry and underpinned by a strong labour market. And with rental costs rising at record rates, home ownership continues to be an attractive option for those who can make the sums work.

"However, the housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year."

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