House prices fell 1.6% last month after surprise leap in February

House prices fell by 1.6% month-on-month in March following a huge 6% jump in February, figures show.

Across the UK, the average house price was £233,181 last month – 3.2% higher than a year earlier – Halifax said.

February’s month-on-month increase had been a record for the index, which started in 1983, taking housing market commentators, who described the jump as “eye-watering”, by surprise.

Russell Galley, Halifax managing director, said the 1.6% month-on-month fall “partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures”.

He continued: “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 3.2% and is still within our expectation for the year.”

Mr Galley said the challenges of raising a deposit to buy a home and lower housing market activity generally, combined with 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”.

Howard Archer, chief economic adviser at EY ITEM Club, said: “A marked correction in house prices was only to be expected in March following the eye-watering and frankly bizarre record 6% month-on-month jump in prices reported in February.

“The overall impression is that the housing market is currently soft as it is being hampered by challenging conditions with buyer caution currently being reinforced by heightened Brexit and economic uncertainties – although there are significant variations across regions with the overall picture being dragged down by the weakness in London and the South East.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said he does not expect to see a sustained period of falling house prices.

He said: “Low unemployment and stable mortgage rates are sustaining housing demand, despite Brexit uncertainty…

“Accordingly, we still expect year-over-year growth in the official measure of house prices to stabilise at about 1.5% this year.”

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