House prices in the UK registered a 0.9% month-on-month increase in October, the latest Nationwide House Price Index has indicated.

This has taken the annual rate of house price growth up to -3.3%, having stood at -5.3% in the year to September.

As a result, Nationwide has priced the average UK household at £259,423 in October, up from £257,808 in September.

Despite the upwards movement in average prices, however, Nationwide chief economist, Robert Gardner, suggested that housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September – a figure around 30% below the monthly average prevailing in 2019.

“This is not surprising as affordability remains stretched,” Gardner said. “Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021.

“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.”

Gardner also suggested that activity and house prices are likely to remain “subdued” in the coming quarters.

“Despite signs that cost of living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries,” he added.

“With bank 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.

“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.”

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