The lender’s latest House Price Index showed prices dropped by 1.1% in March, only the third monthly decline in the past 15 months.
However, prices in the three months to March were 8.7% higher than in the same period a year earlier and 2.3% higher than in the final quarter of 2013.
Stephen Noakes, mortgages director at Halifax, said: “Housing demand continues to be supported by an improving economic outlook, growth in employment, rising consumer confidence and low interest rates.
“The recent strengthening in house price is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply and easing pressure on prices.”
The Halifax figures follow a report by Nationwide released earlier this week which said house price growth was showing “some tentative signs of moderation”.
However, it also said average prices in March were 9.5% higher than the same time last year.