UK house prices unexpectedly rose by 0.9% month on month in October, reflecting a constrained supply of properties for buyers to choose from, according to Nationwide’s index.
However, the building society said the average property value was still down year on year – a 3.3% drop compared with the same month last year – falling to £259,423.
Robert Gardner, Nationwide’s chief economist, said that despite October’s monthly rise: “Housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30% below the monthly average prevailing in 2019.
“The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained.
“There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels. Activity and house prices are likely to remain subdued in the coming quarters.”
He said that with the Bank of England base rate not expected to decline significantly in the years ahead, “borrowing costs are unlikely to return to the historic lows seen in the aftermath of the pandemic”.
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Gardner added: “Instead, it appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim.”
