This is the biggest monthly decline since September 1992. While the lender says house prices were 1% lower in Q1 2008 than in Q4 2007, it maintains that they remain 1.1% higher than in March 2007.
Halifax says that despite an overall drop in prices, many areas continue to experience increases in house prices with Greater London, East Anglia and the East Midlands all seeing rises of nearly 1.5% or more.
Martin Ellis, chief economist at Halifax, says: “House prices fell by 2.5% in March. Prices in Q1 2008 were 1% lower than in Q4 2007.
“Overall, we expect there to be a modest fall in UK house prices this year. But any declines should be viewed in the context of the significant price rises over recent years. The average UK price has risen by £120,860 during the past decade from £70,696 to £191,556 – an increase of 171%.”
He adds: “Sound economic fundamentals are supporting house prices. A strong labour market, low interest rates and a shortage of new houses underpin housing valuations. Our research shows that the labour market is the key driver of the housing market.
“Employment is at a record high and unemployment continues to fall.”
Halifax’s index also suggests that a significant increase in the deposit being put down shows buyers are in a stronger position than in the past.
The index says 82% of buyers put down more than 10% on their home in Q4 2007 compared to only 56% in 1989 and 1990.