���˿���

House prices fell in March for the first time in six months, according to the latest data from Halifax.

The lender said prices dropped by 1% last month, with higher mortgage rates affecting affordability for prospective buyers.

The average house price fell by about £2,900 to £288,430.

However, Halifax said that house prices were still ahead of where they were last year.

Prices were 0.3% higher in March from a year earlier, although that was down from the 1.6% annual increase seen in February.

Kim Kinnaird, director of Halifax Mortgages, said the monthly fall in prices between February and March was "not entirely unexpected particularly in view of the reset the market has been going through since interest rates began to rise sharply in 2022".

"Despite this house prices have shown surprising resilience in the face of significantly higher borrowing costs," she said.

“Affordability constraints continue to be a challenge for prospective buyers, while existing homeowners on cheaper fixed-term deals are yet to feel the full effect of higher interest rates."

Halifax's findings echo rival lender Nationwide, which earlier this week also reported a fall in house prices during March.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said rising mortgage rates had "finally taken a toll on the housing market".

"Through February we had the price momentum of buyers who’d already agreed cheaper mortgages in January. Now that’s petering out, and prices have fallen," she said.

UK interest rates hit record lows during the Covid pandemic, but the Bank of England began raising rates at the end of 2021 as it sought to keep control of inflation - the rate at which prices rise.

This had a knock-on effect on mortgage rates which also began to increase, making it more expensive to borrow money for buying a house.

Mortgage rates peaked last summer and began to fall as expectations grew that the Bank of England will start to cut interest rates this year.

This led to a pick-up in activity in the housing market and February saw the highest number of mortgage approvals since September 2022, according to Bank of England data released earlier this week.

However, doubts about whether the Bank of England will reduce rates as quickly as some had expected has stalled cuts to mortgage rates, and some lenders have pushed them back up.

"The housing market remains sensitive to the scale and pace of interest rate changes, and with only a modest improvement in affordability on the horizon, this will likely limit the scope for significant house price increases this year," said Ms Kinnaird.

Halifax's house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.