According to the Halifax, house prices fell in March for the first time since last September. A 1.0 percent monthly drop was a good deal steeper than the market consensus and, following a slightly smaller revised 0.3 percent gain in February, reduced the annual inflation rate from 1.6 percent to 0.3 percent, a 4-month low. That said, average prices remain almost £50,000 above pre-pandemic levels.

In fact, while the quarterly change, the best guide to underlying developments, eased 0.5 percentage points it was still robust at 2.0 percent. The lender pointed to contrasting pressures on prices with support from rising demand and a resilient labour market competing against affordability constraints and a generally more cautious view of how quickly borrowing costs will fall. This scenario looks likely to hold for several months yet.

Today's data compare with the 0.2 percent monthly fall already reported in the Nationwide survey but the trend in both gauges remains up. The UK RPI ends the week at minus 7 while the RPI-P now stands at 10. Mild overall economic underperformance is wholly attributable to surprisingly weak prices good news for those expecting a cut in Bank Rate later this quarter.

Prices are expected to rise 0.3 percent on the month after a 0.4 percent gain in February.

The Halifax House Price Index (HPI) is the UK's longest running monthly house price measure with data covering the whole country going back to January 1983. The index is based on the largest monthly sample of mortgage data, typically covering around 15,000 house purchases per month, and covers the whole calendar month. In March 2016 Markit announced that it would be acquiring the Halifax HPI from Lloyds Banking Group. Halifax continues to publish the index on behalf of Markit and both the name and the basic methodology remain unchanged. However, in May 2020, the annual growth measure was changed from the average of the last three months to just the latest month.

Home values affect much in the economy - especially the housing and consumer sectors. Periods of rising home values encourage new construction while periods of soft home prices can damp housing starts. Changes in home values play key roles in consumer spending and in consumer financial health. During the first half of this decade sharply rising home prices boosted how much home equity households held. In turn, this increased consumers' ability to spend, based on wealth effects and from being able to draw upon expanding home equity lines of credit.