Halifax said prices were now increasing at less than half the rate they were a year ago, with values rising at an annual rate of 3.8 per cent in March, compared to a 10 per cent rate recorded a year earlier. This March’s figure was the lowest, year-on-year rate in almost four years.According to Halifax’s method of calculation, the average UK-wide home price last month stood at £219,755. Monthly growth was unchanged from February and, over the first three months of the year, prices increased by only 0.1 per cent from the last quarter of 2016.

Growth more than halved in past year

Martin Ellis, a housing economist at Halifax, said, “The annual rate of house price growth has more than halved over the past 12 months.“A lengthy period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand.“Nonetheless, the supply of both new homes and existing properties available for sale remains low. This, together with historically very low mortgage rates, is likely to support house price levels over the coming months.”Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said Halifax’s index reflected other recent property reports indicating a slowdown, adding that he expected prices to increase by just 2 per cent over the course of 2017.“It’s now incontrovertible that the housing market has slowed sharply this year,” he said. “House prices are being increasingly constrained by households’ incomes, now that mortgage rates have hit a floor and regulations are preventing a further upward shift in average loan-to-income ratios.”

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Nicholas Finn, executive director of Garrington Property Finders, added, “What began as a soft landing has slowed to a gentle taxi off the runway. A year ago, the property market was soaring, now it is stuck on terra firma – with annual price growth little over a third of what it was in March 2016.“While the acute supply shortage is propping up prices to a degree, much of the market has become listless, with pockets of extremes. Some areas are seeing double-digit reductions, while others are plagued by gazumping.“But against the uncertain economic backdrop, there is cause for some optimism as buyer intent remains strong in many parts of the UK.“Yet despite the continued availability of some exceptional mortgage deals, most buyers are acutely price sensitive.“No one wants to buy a home only to realise they could have got it cheaper if they had waited. As a result buyers, not sellers, are setting the tone – scrutinising prices harder than ever and refusing to overpay.“Despite rapidly rising consumer inflation, the Bank of England is likely to hold back any increase in interest rates for as long as possible, leaving the way clear for the property market to continue its sluggish progress.“We expect average prices to continue inching upwards, albeit at a subdued pace as house price to earnings ratios begin to bite in many parts of the country.”

No cause for concern

Rob Weaver, director of investments at property investment marketplace Property Partner, commented, “The rate of annual growth is definitely slowing which we have said for a long time is a good thing. Albeit this month it is little lower than we might have expected, this is definitely not setting off alarm bells.  “I would be surprised if this can be attributed to Article 50. Brexit is potentially one of many factors contributing to a slow down along with tighter lending criteria and stamp duty but it is a slowdown in the rate of growth, not a fall, in house prices.“The fundamentals that underpin the market are still there and are very solid, which continues to make residential a compelling investment.“Indices are only a guide to directions in the market and tend to be more volatile in the short term so we should not read too much into this. Associating this with Article 50 may be a little naïve, you can almost put a ruler to the graph of quarterly annual change for the last 12 months.”“The low levels of turnover in the market continues to be a concern and a sign of a broken market. A fully functioning residential property market is good for the economy and we would like to see greater support for the first-time buyer and improved lending.”For related news and features, visit our Residential Property section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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