The average UK house price experienced its first monthly decline of 2026 in March, falling by 0.5 per cent, according to a new index.

This dip follows increases of 0.8 per cent in January and 0.3 per cent in February.

Halifax reported the average UK house price stood at £299,677 last month. Annual growth in property values also softened, reaching 0.8 per cent in March, down from 1.2 per cent the previous month.

Amanda Bryden, head of mortgages, Halifax, said: “The recent slowdown in the housing market reflects the wide uncertainty regarding the conflict in the Middle East.

“Concerns about higher energy prices have pushed up inflation expectations, which in turn led to a rise in mortgage rates, reducing confidence that interest rates will be cut this year and dampening the initial momentum in the market seen at the start of the year.”

She added: “The recent increase in UK mortgage rates has been more modest than the sharp rises seen during the mini-budget of 2022.

“Further, many households will already be on fixed deals, protecting them from the latest rate rises.

“Taking all this into account, house prices may prove resilient, even if uncertainty weighs on market activity in the near term.”

The report said that Northern Ireland continued to lead UK annual house price growth, with average prices up by 8.7 per cent over the past year to reach £224,809.

Strong growth was also recorded in Scotland, with average house prices rising by 4.4% annually to reach an average price of £222,716.

Wales saw a more modest average house price increase of 1.6 per cent on an annual basis, taking the typical home value to £230,909.

In England, stronger price growth remains concentrated in northern regions, the report said.

House prices in the North East have increased by around 5 per cent typically annually to reach £184,119 while the North West recorded annual growth of 3.1 per cent, with the average home costing £247,442.

Tom Bill, head of UK residential research at Knight Frank, said: “What goes up must come down, but for mortgage rates the drop will be more gradual than the sharp increase triggered by the Middle East conflict, even if the two-week ceasefire deal holds.”

He said factors including the longer-term inflationary impact “means mortgage rates won’t snap back to where they were in February”.

“This will keep demand and house prices in check this year.”

Karen Noye, a mortgage expert at wealth manager Quilter, said: “Changes in mortgage costs do not feed through to house prices immediately, so any meaningful shift in price momentum linked to the recent rise in borrowing costs is likely to emerge from this point onwards.

“Looking ahead, the path for house prices will depend largely on how the conflict evolves.

“For households with mortgages due to mature later this year, the lesson from recent weeks is that geopolitical risk can feed through to borrowing costs very quickly. Securing a rate early can provide certainty in an unpredictable market while still allowing flexibility should conditions improve.”

Nathan Emerson, chief executive officer of property professionals’ body Propertymark, said: “We started the year with positivity in terms of seeing an uplift in the average number of viewings per available property, coupled with general consumer positivity regarding affordability.

“However, a lot has changed in a short space of time, with numerous sub-4% mortgage deals being withdrawn over the last few weeks as the wider economy adjusts to potential uncertainties.”

Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said “the underlying market remains robust”, adding: “Serious buyers are still very active, with second viewings continuing and sales being agreed at levels typical for this time of year.

“While there is greater awareness of cost, for the right property, committed buyers are continuing to move forward with confidence.”

Iain McKenzie, chief executive officer of The Guild of Property Professionals, said: “Sales agreed remain relatively stable.”

Here are average house prices and the annual change, according to Halifax (regional annual change figures are based on the most recent three months of approved mortgage transaction data):

East Midlands, £333,455, minus 0.6%

Eastern England, £246,636, 0.5%

London, £536,751, minus 1.2%

North East, £184,119, 5.0%

North West, £247,442, 3.1%

Northern Ireland, £224,809, 8.7%

Scotland, £222,716, 4.4%

South East, £383,573, minus 1.9%

South West, £301,859, minus 0.6%

Wales, £230,909, 1.6%

West Midlands, £265,126, 1.7%

Yorkshire and the Humber, £217,704, 1.2%