UK house prices fell by 0.5% in March 2025, marking the sharpest monthly drop in a year, according to data from Halifax. The average home price now stands at £296,699, down from February’s already-declining levels. The dip follows a frenzied rush in early 2025, as thousands of buyers scrambled to close deals ahead of the April 1 changes to stamp duty thresholds.
Under the revised rules, first-time buyers in England and Northern Ireland now pay stamp duty on homes priced above £300,000, down from the previous £425,000 threshold. The general exemption limit for all buyers was also reduced from £250,000 to £125,000. The tightening of these thresholds has directly impacted affordability and, in turn, market momentum.
Amanda Bryden, head of mortgages at Halifax, noted that demand surged in January as buyers raced to benefit from the outgoing stamp duty relief. Since then, however, market activity has cooled, and mortgage applications have slowed. “We’re seeing a return to more normal market conditions,” Bryden said, adding that rising borrowing costs and limited housing supply remain ongoing challenges.
The broader economic backdrop is also weighing on the housing market. While annual house price growth remains positive at 2.8%, the consecutive monthly declines in February and March suggest a period of adjustment is underway. Analysts expect further moderation in the months ahead as the effects of the tax policy shift and elevated mortgage rates ripple through the system.
Nationwide has similarly reported flat prices for March and echoed the view that the near-term outlook for the housing sector remains subdued. However, potential base rate cuts later this year, combined with steady wage growth, may help improve affordability and spark renewed buyer interest.
For now, the market is in recalibration mode. Buyers and sellers alike are being urged to monitor evolving economic conditions, particularly in relation to interest rates and tax policy, which continue to shape affordability and transactional timing in the UK’s residential property landscape.
