This was the same as the slight fall recorded between the third and fourth quarters of 2011 and the underlying trend indicates broad stability in UK house prices, the Halifax said.
The more volatile monthly figures continue to fluctuate as a result of the historically low level of sales volumes, increasing by 2.2% in March following February's 0.4% fall.
‘Efforts by first time buyers to beat the expiry of the stamp duty holiday at the end of March have probably increased sales in recent months and may have helped to support prices,’ said Martin Ellis, housing economist at the Halifax.
‘We continue to expect little overall movement in prices this year provided that the UK economy does not suffer a pronounced weakening,’ he added.
The figures also show that prices in the first three months of 2012 were 0.6% lower than in the same period last year. This was the smallest fall in prices on this measure of the annual rate since October 2010.
The average UK house price is now at the same level as in July 2011. The UK average price in March 2012, at £163,803, was almost identical to that in July 2011 at £163,765.
Overall there are Signs of a pick up in house sales. The number of completed house sales has risen to its highest levels since late 2009. The number of sales in January and February was a seasonally adjusted 81,000 in both months. This was 14% higher than in the same period last year, according to data from HMRC.
However, market conditions, as measured by the ratio of house sales to the stock of unsold properties, reported by the Royal Institution of Chartered Surveyor's monthly survey, have tightened slightly in recent months, driven by the increase in sales. This modest improvement in market conditions has probably helped to support house prices.
The Halifax reports says that the recent increase in sales may have been driven by first time buyers seeking to beat the end of the stamp duty holiday. The proportion of house purchasers who are first time buyers increased between the final quarter of 2011 and the first quarter of 2012.
This suggests that the ending of the temporary increase in the starting threshold of stamp duty for first time buyers from £125,000 to £250,000 in late March encouraged some to buy before the threshold reverted to the lower level.
An extra four in ten first time buyers, 150,000 in total, have been exempt from paying stamp duty as a result of the UK government temporarily doubling the starting threshold over the past two years.
The Halifax figures, which are compiled using mortgage approvals alone, are a reminder of the extent to which cash purchases are supporting the market, according to David Brown, commercial director of LSL Property Services.
‘While purchases reliant on mortgage finance have been subdued by the availability of high LTV mortgage finance, London has bumped up national prices over the past year, as cash purchases for high value properties have proved a popular way for wealthy buyers to protect finance from global economic uncertainty,’ he said.
‘Halifax’s numbers remind us the economic conditions in the UK are still challenging for mortgage lenders and borrowers are being pushed to find large deposits before they can make a purchase. But they don’t show the strength of the market for cash buyers looking to snap up well-valued property. In areas where fewer buyers have to rely on mortgage finance, prices are looking healthier than these numbers suggest,’ he added.
