House prices dipped by 0.1% in February, vs growth of 0.6% in January, the latest Halifax house price index shows.
However, annual growth remains at 2.9%, unchanged from January.
Most areas of the UK saw a slowdown in house price inflation in February.
Bucking the trend most notably was Scotland, which saw annual growth increase to 3.8% compared to 2.5% in January, marking the fastest pace of growth in 13 months.
Northern Ireland continues to have the strongest annual property annual price growth in the UK, largely unchanged at 5.9% in February, while house prices in Wales were up 2.8% compared to the previous year.
In England, Yorkshire and Humberside recorded the strongest annual property price growth for the first time since July 2021, up 4.1% compared to the previous year.
London saw annual house price growth ease considerably from 2.6% in January to 1.6% in February. The capital still has by far the most expensive average property price in the UK, at £545,183.
Amanda Bryden, head of mortgages at Halifax, said: “February's figures highlight the delicate balance within the UK housing market. While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.
“That may help to explain why growth in first-time buyer property prices eased in February, falling to 2.4%, in contrast to homemover price inflation which accelerated, reaching 3.7%
“While house price growth has slowed overall, market activity remains strong and comparable to pre-pandemic levels, demonstrating a resilience amongst buyers that’s been evident in the face of higher borrowing costs.
“While those affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests property prices will continue to rise this year, albeit at a more measured pace compared to last year.”
Tanya Elmaz, director of sales at Together, commented: “House prices slumped after an initial rebound, falling 0.1% in February. Its surprising considering the activity in the market as buyers race to beat the looming stamp duty deadline. We expect to see a further drop when this comes into effect next month.
“In addition, while interest rates are expected to fall further this year, inflation remains volatile, meaning mortgage rates could remain higher for longer, which could delay some buyers getting onto or stepping up the housing ladder. There is also the consideration that news from across the Atlantic changes daily, so predicting what will happen to the market is increasingly difficult.
“That said, there are plenty of opportunities out there, whether that be for aspiring homebuyers or landlords looking to invest. Those keen to move forward with their property plans are best to consider the wide range of financial products available, like shared ownership or bridging loans for fast, flexible finance.”
Mark Eaton, chief operating officer at April Mortgages, added: “While these figures show a marginal fall in house prices this month, the reality is that it knocks just a couple of hundred pounds off the average cost of a home.
“Stagnant house price growth is not uncommon at this time of the year, but it could mean that the difficult economic challenges facing households are softening growth.
“The recent announcement that energy bills are due to increase yet again could push more potential buyers to sit on the fence rather than sign up for a chunky mortgage.
“When house prices fall, even if it’s just a modest nudge downwards, the industry must look beyond blaming short-term policy changes and instead look at longer-term challenges like affordability.
“Tackling affordability concerns is no easy task. Improving access to affordable housing or rent-to-buy properties could help, but those are long-term measures.
“Raising awareness of larger loans of six or seven times the income of a buyer, using 10-year fixed-rate periods, will help those that are looking to escape the costly rental market, but are earning enough to show they are capable of affording a bigger mortgage.”
