House prices in the UK fell 0.4% between February and March, according to latest data released by the Office for National Statistics (ONS), and average monthly rents increased by 3.5% in the 12 months to April hitting £1,381.

The ONS stated that house prices were unchanged over the year but down over the year in every English region except the East Midlands and the East of England, with prices in London falling 2.1% in the past 12 months.

Sarah Coles, head of personal finance at AJ Bell, commented: “Property prices are teetering on the edge. They fell between February and March, and on an annual basis they’ve dropped in seven out of nine regions in England. Unfortunately, things could get worse from here.

“These are the selling prices of sales that completed in March, so they reflect demand around the end of 2025. The market wasn’t much to write home about at the time and December tends to be a tricky month for sales anyway, but interest rates on mortgages were lower than they are now and were expected to fall coming into this year.

“Since then, the harsher environment is likely to have taken a toll. Mortgage rates climbed for weeks, and although they’ve eased slightly, they’re still higher than before the start of the Iran war. It means we could see some annual price falls filter into the figures in the coming months."

Responding to increasing average monthly rents, Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Rent inflation has historically tracked wage inflation and we have seen this relationship harmonise in the past year following the severe upwards pressure on rents in the post-Covid era.

“The conflict in Iran is building some further inflationary pressure into the economy and that will likely be reflected in the rental market in the coming months. Landlords are not immune to cost pressures and 72% of those planning to increase rent in the next year will do so because of the rising costs they face in operating their business, with six in 10 citing a higher tax burden following the 2025 Autumn Budget.

“Rising mortgage rates are often claimed to be a driver of rental inflation, but less than 40% of rental properties are mortgaged, with the vast majority of those subject to a fixed-rate mortgage, so the impact of mortgage rates increasing is unlikely to be felt across the broader rental sector.”

---