LONDON (dpa-AFX) - UK house prices dropped for the second straight month in March as stamp duty holiday ended amid weaker economic outlook, mortgage lender Halifax said Monday.
House prices slid unexpectedly by 0.5 percent month-on-month, bigger than February's 0.2 percent drop. This was the second consecutive decline. Prices were forecast to climb 0.2 percent.
On a yearly basis, growth in house prices remained at 2.8 percent in January. Average property price cost GBP 296,699 compared to GBP 298,274 in previous month.
Halifax Head of Mortgages Amanda Bryden said with the deals entered in January ahead of the March stamp duty deadline completed, demand is returning to normal and new applications slowing.
Bryden observed that potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and also 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,' said Bryden.
Capital Economics economist said the fall in Halifax house prices provides further evidence that the boost from buyers rushing to complete home purchases before the rise in stamp duty on April 1 had already run its course and had been offset by the weak economy and the recent rises in mortgage rates.
'If the increased downside risks to UK GDP growth posed by Trump's tariffs mean interest rates are cut faster than we expect this year, house price growth could be a bit faster,' the economist said.
In March, the Bank of England maintained the Bank Rate at 4.5 percent, which was the lowest level since June 2023. The bank had reduced the rate by 25 basis points in February after two such reductions last year.
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