UK House Prices Drop 0.5% in March on Conflict Fears

UK house prices declined by 0.5 percent in March, reversing a modest 0.3 percent increase from February, as uncertainty from the Middle East conflict dampened buyer demand and pushed mortgage rates higher, according to data from mortgage lender Halifax.

The average property value now stands at 299,677 pounds, dipping below the 300,000-pound mark achieved earlier in the year. Annual growth slowed to 0.8 percent compared with March of the previous year, down from 1.2 percent in February and below economists' expectations of 1.5 percent. The drop marks the first monthly decline of the year, following gains of 0.8 percent in January and the February uptick.

Halifax attributed the slowdown to heightened concerns over the conflict involving Iran, which raised fears of elevated energy prices and persistent inflation. These worries reduced expectations for interest rate cuts this year, leading lenders to withdraw hundreds of low-rate mortgage deals. Fixed-rate mortgages, particularly the lowest ones, climbed from around 3.5 percent to 4.75 percent since early March. For a 200,000-pound mortgage over 25 years, this shift could increase monthly repayments from 1,002 pounds to 1,140 pounds.