Regional House Growth: Prices Drop 0.5% in March

In March 2025, regional house growth slowed as UK house prices declined by 0.5%, bringing the average price to £296,699. This drop, as revealed by the latest Halifax House Price Index, comes after a period of rapid growth earlier in the year. Despite this dip, the overall picture is not entirely negative, with annual growth holding steady at 2.8%, unchanged from February.

Regional Disparities in House Price Movements: Regional House Growth

While the national picture reflects a marginal decline, there have been significant regional differences in house price trends. Some areas have witnessed notable increases, particularly in Northern Ireland, where property values rose at an impressive rate of 6.6%. This growth stands out as the fastest in the UK during this period.

House Price Growth in Scotland

Scotland also recorded a strong performance in the housing market, with house prices rising by 4.3% in March. This figure marks an improvement from the 3.8% increase observed in February. The average house price in Scotland now stands at £213,750, reflecting the continued strength of the market in this region. This growth pattern suggests that buyers in Scotland are relatively confident, despite the challenges faced by other parts of the UK.

Wales: A Solid Increase

Wales saw property prices rise by 3.7% in March, reaching an average of £227,332. This continued positive momentum in the Welsh housing market demonstrates resilience, particularly in comparison to other regions where price increases were more modest. The growth in Wales aligns with the broader trend of regional housing markets showing varying levels of growth, with some areas continuing to outperform others.

Strong Performance in Yorkshire and Humberside

In Yorkshire and Humberside, property values increased by 4.2% year-on-year. The average price of homes in this region now stands at £215,807. This increase reflects a solid recovery in house prices in the region. It contrasts with weaker areas, such as parts of London.

The Slowdown in London’s Housing Market: Regional House Growth

While many regions have shown strong growth or stability, London’s property market has been experiencing a slower pace of price growth. In March, annual house price growth in the capital slowed further, dipping from 1.5% in February to just 1.1%. Despite this deceleration, London still has the highest average house price in the UK. Properties in the city now average £543,370.

The slower growth in London is indicative of a more cautious market, which may be influenced by factors such as higher borrowing costs and the broader economic climate. Despite this, London remains a market of significant interest for both domestic and international buyers. However, the pace of price appreciation has slowed.

Insights from Halifax’s Head of Mortgages, Amanda Bryden

Halifax’s head of mortgages, Amanda Bryden, provided some context for these trends. According to Bryden, the housing market saw a surge in activity in January. Many buyers rushed to complete transactions before the stamp duty deadline in March. This surge in activity led to higher demand, but as those deals have now concluded, the market has returned to a more typical pace.

Bryden explains, “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.”

Factors Affecting the Housing Market: Regional House Growth

The ongoing changes in house prices are influenced by several factors. Notably, higher borrowing costs and limited property supply play key roles. These challenges are expected to persist in the near future. They will continue to strain potential buyers facing difficulties securing affordable mortgages.

Despite these challenges, Bryden remains optimistic about the medium-term outlook for the housing market. She notes that there are some positive signs, including the possibility of further base rate cuts, which could help ease borrowing costs for homebuyers. Additionally, the ongoing trend of positive wage growth in the UK may gradually improve mortgage affordability for many buyers.

With these factors in mind, Bryden predicts that house prices will see a modest increase over the course of the year. While the market is likely to remain relatively flat in the short term, there is optimism that conditions will gradually improve.

Economic Uncertainty and the Housing Market Outlook

Looking ahead, the broader economic context remains uncertain. Factors such as inflation, interest rates, and political developments all contribute to an environment of unpredictability for homebuyers and sellers. However, despite these challenges, there are signs that the market is adjusting to the new normal of higher borrowing costs and limited supply.

In particular, the impact of the Bank of England’s interest rate policies is likely to continue shaping the housing market. While some analysts expect further base rate cuts, others remain cautious about the potential for significant changes in the near future. Regardless of the outcome, the housing market is expected to operate in a more subdued environment for the time being.

The supply of properties available for sale remains a key concern. With many sellers holding off on putting their homes on the market due to economic uncertainty, buyers continue to face challenges in finding suitable properties. This lack of supply is particularly pronounced in certain regions. In London, demand remains high, but available homes are limited.

Conclusion: The Future of the UK Housing Market

In summary, while March 2025 saw a slight dip in house prices across the UK, the overall picture remains relatively stable. Regional differences are significant, with areas like Northern Ireland, Scotland, and Yorkshire showing strong growth. Meanwhile, London continues to experience slower price increases. The housing market remains influenced by factors such as borrowing costs and property supply. These factors will continue to shape trends throughout the year.

As Halifax’s Amanda Bryden points out, while potential buyers face challenges, there are reasons for cautious optimism. Base rate cuts and positive wage growth could help improve mortgage affordability, which may lead to a modest rise in house prices later in 2025. Ultimately, the UK housing market will likely experience a period of adjustment due to the current economic landscape. Some regions will outperform others, while price growth stabilises overall.