House prices in the three months to March were 2.6% higher than in the same three months a year earlier, the Halifax House Price Index has found.
This is despite the average house price dropping by 1.6% in March to £233,181.
From January to March house prices were 1.6% higher than in the preceding three months, from October to December 2018.
Russell Galley, managing director, Halifax, said: “This reduction partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures.
“Industry-wide figures show that the number of mortgages being approved remains around 40% below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements.
“The more stable measure of annual house price growth rose slightly to 2.6% and is still within our expectation for the year.
“The need to build up a deposit before getting a mortgage is still a challenge for many looking to buy a property. However, the combined effect of fewer houses for sale and fewer people looking to buy continues to support prices in the long-term.
“These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London, meaning that we continue to expect subdued price growth for the time being.”
Monthly UK home sales remained steady with February seeing 101,780 home sales, which, as for January, was very close to the five year average of 101,135.
When comparing sales in December to February, against September to November there was a 0.4% drop. February home sales were 2.8% above the previous 12-month average, HRMC figures showed.
Bank of England industry-wide figures showed that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – fell by 3.5% to 64,337 from February to January.
This compares to a rise of 3.6% in the previous month. As a result, the mortgage approval figure is back to being very close to the December figure.
Tomer Aboody, director of property lender MT Finance, added: “March has been dominated by Brexit so the monthly fall in property prices comes as no surprise.
“For the past couple of years March was flagged up as the date when we would get Brexit and people have been too busy watching the political shenanigans on television to go out and view houses.
“The Brexit saga is such a debacle and until it gets sorted, one way or another, few people are going to do anything.
“There are fewer enquiries out there and fewer people want to sell. Less stock means values will go down – those selling are those who have to sell and may therefore take a lower price. Those who are brave enough to buy believe nothing is going to change in the future so they are going to take advantage of the uncertainty.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, was more positive.
He said: “Yet another set of figures demonstrating better than expected resilience of the UK housing market but also the dangers of reading too much into one month’s figures.
“On the ground, we are seeing more buying activity in the buildup to the traditionally busier Spring market but it is patchy, encouraging in some areas, disappointing in others, even sometimes very close to one another.
“On the other hand, many sellers are still cautious, awaiting a small sign at least that their Brexit nightmare will soon be over and they will have more confidence about taking on additional debt.”