The average UK house price increased by 0.5% in April, following seven months of successive falls in the housing market.

According to the latest Nationwide House Price Index, the rate of annual change also improved to -2.7% in the year to April, up from -3.1% in March.

These figures left the average UK house price at £260,441 in April, having increased from £257,122 in the previous month.

April’s monthly increase still leaves house prices 4% below their August 2022 peak, although chief economist at Nationwide, Robert Gardner, suggested the latest month’s data indicates “tentative signs of a recovery” for the market.

“Recent Bank of England data suggests that housing market activity remained subdued in the opening months of 2023, with the number of mortgages approved for house purchase in February nearly 40% below the level prevailing a year ago, and around a third lower than pre-pandemic levels,” Gardner said. “However, in recent months industry data on mortgage applications point to signs of a pickup.

“This also chimes with the recent shifts in consumer sentiment. While confidence remains subdued by historic standards, people’s views of their own financial position over the next 12 months, and general economic conditions in the year ahead, have both improved markedly in recent months.

“If inflation falls sharply in the second half of the year, as most analysts expect, this would likely further bolster sentiment, especially if labour market conditions remain strong.”

Gardner added that improvement in consumer sentiment would also support a “modest recovery” in housing market activity, but suggested any upturn is likely to remain “pedestrian”.

“It will take time for household finances to recover, since average earnings have been failing to keep pace with inflation, and by a wide margin over the last few years,” he said.

“Mortgage interest rates are also likely to act as a headwind. While they are well below the highs seen in the wake of the mini-Budget last year, rates are still more than double the level prevailing a year ago.

“Nevertheless, if gains in nominal incomes remain solid – wage growth has been running at above 7% in the private sector – this, together with weak or declining house prices, will help improve housing affordability over time, especially if mortgage rates continue to trend lower.”

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