October saw a surprise 0.9 per cent rise in UK house prices according to the Nationwide, after taking account of seasonal effects. 

This resulted in an improvement in annual house price change, to a drop of 3.3 per cent, after an annuakl drop of 5.3 per cent was recorded a month earlier. 

Nevertheless, the Nationwide insists housing market activity has remained extremely weak, with just 43,300 mortgages approved for house purchase in September, around 30 per cent below the monthly average prevailing in 2019.

Robert Gardner, the Nationwide’s chief economist, says: “This is not surprising as affordability remains stretched. 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.

“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.

“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.”

Other analysts feel the same way – this isn’t recovery for the housing market.

Susannah Street, head of money and markets at business consultancy Hargreaves Lansdown, says: “The effect of high interest rates is showing up again in the UK. Many would-be buyers are reluctant to move, given the lack of affordable mortgage deals, so there are fewer houses on the market, which has driven up house prices in October. 

“The data from Nationwide showing a rise may on the face of it, appear to show the housing market is in better shape, but it is more indicative of homeowners staying put rather than swallowing sharply higher borrowing costs. 

“The market is set to stay in the deep freeze while interest rates stay high or there’s more of a shift down in house prices, making them more affordable to first-time buyers in particular.”