The average UK house price tumbled by £1,575 in March, according to an index.
Across the UK, the average value of a home in March was £296,699, down from £298,274 the previous month, Halifax said.
On a month-on-month basis, property values fell by 0.5% typically in March.
The annual rate of growth remained at 2.8%, which was unchanged from February.
Stamp duty changes took place from April 1, with “nil rate” bands shrinking. Stamp duty applies in England and Northern Ireland.
Amanda Bryden, head of mortgages, Halifax, said: “House prices rose in January as buyers rushed to beat the March stamp duty deadline.
“However, with those deals now completing, demand is returning to normal and new applications slowing. Our customers completed more house sales in March than in January and February combined, including the busiest single day on record.
“Following this burst of activity, house prices, which remain near record highs, unsurprisingly fell back last month.
“Looking ahead, potential buyers still face challenges from the new normal of higher borrowing costs, a limited supply of available properties to choose from, and an uncertain economic outlook.
“However, with further (Bank of England) base rate cuts anticipated alongside positive wage growth, mortgage affordability should continue to improve gradually, and therefore we still expect a modest rise in house prices this year.”
Looking at nations and regions, Halifax said Northern Ireland continues to record the strongest annual property price growth, with prices rising by 6.6% in March. It is followed by Scotland, with a 4.3% annual increase.
In England, Yorkshire and the Humber also had strong growth, with property prices increasing by 4.2%.
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London saw weaker annual price growth, at 1.1% in March. High house prices in the capital could leave some buyers paying significantly more under the stamp duty changes. London has the highest average house prices in the UK, at £543,370.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “First-time buyers are likely to be stung the most by the stamp duty threshold changes as they now not only need to raise a deposit but must also find extra cash to fund a higher tax bill.
“Home-buyers are likely to be reassessing their options much more carefully now, as they have not only missed the boat to secure lower property tax charges but must also contend with a very uncertain economic outlook.
“Affordability levels may have improved slightly thanks to easing mortgage rates – a result of three interest rate cuts since August last year – along with resilient wage growth, but April is proving to be a challenging month.”
Nathan Emerson, chief executive of property professionals’ body Propertymark, said: “This house price reduction will be a huge disappointment to many sellers hoping to make gains on a house sale to climb up the housing ladder, but it could also be an opportunity for aspiring homeowners to take advantage of the slight reduction in house prices and take their first step, or next step, on to the housing ladder.”
Tom Bill, head of UK residential research at Knight Frank, said: “As buyers adapt to higher rates of stamp duty, the positive news is that US trade tariffs announced last week have put downwards pressure on borrowing costs as markets price in an economic slowdown.
“The Bank of England is now expected to cut rates three times this year rather than twice. The risk is that tariffs ultimately prove to be inflationary and the spillover effects mean upwards pressure on mortgage costs in the UK. For now, the spring market feels steady, although the prospect of a tax-raising autumn Budget will throw more uncertainty into the mix later this year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The monthly dip in prices is unsurprising as borrowing costs, which have softened a little recently, remain higher than many buyers were paying not that long ago.
“However, with swap rates (which are used by lenders to price mortgages) falling considerably in recent days on the back of President (Donald) Trump’s tariffs, a significant margin has opened up between swaps and mortgage rates. If this continues, lenders could respond with a flurry of five-year fixed rates starting with a three as opposed to the current position of only one or two priced under 4%.
“This would help affordability and give buyers renewed confidence to make their move.”
Gareth Lewis, managing director of specialist lender MT Finance, said: “Buyers are pushing harder to get a better deal even if it is just marginal, particularly those who are going to pay higher stamp duty because they were too late to meet the deadline.
“Many will try and renegotiate as the month progresses but their success is likely to vary from transaction to transaction.”
Jonathan Handford, managing director at estate agent group Fine & Country, said: “While March saw a dip in house prices, demand may temper post-deadline.
“However, with spring being a traditionally busier period for sales, there’s potential for activity to pick up, particularly if expectations for interest rate cuts continue to grow.”
– Here are average house prices followed by 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, £246,254, 2.9%
Eastern England, £335,731, 1.7%
London, £543,370, 1.1%
North East, £175,825, 2.3%
North West, £240,554, 3.8%
Northern Ireland, £206,620, 6.6%
Scotland, £213,750, 4.3%
South East, £392,444, 2.0%
South West, £304,091, 1.0%
Wales, £227,332, 3.7%
West Midlands, £261,772, 3.3%
Yorkshire and the Humber, £215,807, 4.2%
