House prices dipped last month in the face of global economic uncertainty over the Ukraine war and tariff threats from Donald Trump.
The fall comes at a worrying time for a fragile housing market that faces stamp duty hikes being introduced by Chancellor Rachel Reeves next month.
House prices fell 0.1 per cent in February compared to a rise of 0.6 per cent a month earlier. But according to the Halifax house price index, the average cost of a home is still up 2.9 per cent year-on-year and now stands just shy of £300,000.
Holly Tomlinson, financial planner at wealth manager Quilter, said: ‘Affordability remains stretched and economic uncertainty, both domestic and global, continues to weigh on sentiment.’
She adds: ‘Donald Trump’s renewed rhetoric on tariffs is already unsettling markets – and could drive up inflation.
‘This could hamper Bank of England plans to cut interest rates in the coming months and mean mortgage rates stay higher for long than many had hoped, acting as a drag on house prices.’
With average house prices now £298,602 there are also fears about the impact of stamp duty rises being introduced from April 1.
Stamp duty is currently not payable on the first £250,000 of a property, but this is being lowered to £125,000. For first time buyers, the threshold drops from £425,000 to £300,000.
The US President paused a 25 per cent tariff earlier this week for some goods imported from Canada and Mexico, but the tax could still be introduced at the start of April.
He has also threatened the European Union with a similar 25 per cent tariff, and Britain might not escape being taxed on goods it wishes to export to the US either.
China has already been hit with a slew of tariffs, ranging from 15 per cent for clothes and food to 100 per cent on Chinese electric vehicles.
Amanda Bryden, head of mortgages at Halifax, said: ‘The last-minute rush on new mortgages ahead of the changes to stamp duty has started to fade as the April deadline ticks ever closer and given the time it takes to complete a purchase.’
She added: ‘But while affordability challenges persist, the ongoing shortage of housing supply coupled with sustained demand suggests that property prices will continue to rise this year, albeit at a more measured pace compared to last year.’