A leading industry analyst has suggested there might just be enough economic stability to deter any rise in the Bank of England base rate – and possibly even a fall.

Fears grew of a rise this autumn as a result of the ongoing Middle East tension, economic uncertainty at home, and the recent energy price increase.

However Robert Gardner – chief economist the the Nationwide and architect of its monthly house price index – says: “Market expectations of the future path of Bank Rate have been volatile. 

“While the latest energy price shock poses inflation risks, there have been encouraging signs that it is not feeding through to underlying price pressures. 

“Indeed, private sector wage growth has eased further in recent months, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.

“Underlying affordability is improving, as house price growth remains well below earnings growth. although some of these gains have been offset by higher mortgage rates. 

“Nevertheless, this suggests that activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels.”

Gardner says UK annual house price growth was little changed in August at 1.6%, compared with 1.4% in July. 

Prices were up 0.2% in month-on-month terms, after taking account of seasonal factors.

In response, Jeremy Leaf – a London agent and former chair of the RICS residential faculty – says: “Although prices are still fairly flat – up a bit, down a bit – that’s probably a good result as far as assessing current market health is concerned. Even more so as this data from the country’s largest building society is linked to customer mortgage approvals meaning these figures represent an albeit modest vote of confidence in the future.

“Continuing price sensitivity prompted particularly by mortgage rate and affordability concerns as well as the likelihood of property tax rises in the Budget have been playing on buyers’ minds.

“In our offices, we’re finding the sellers concentrating on the difference between what they’re receiving and what they’re having to pay rather than asking price – bearing in mind four out of five are buyers – are more likely to move, though less quickly as there’s so much choice – and often only after serious negotiations.”

And Amy Reynolds, head of sales at Antony Roberts, comments: “There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is due to initial overpricing meeting the time it takes to find the market level.

“We are seeing a bit of competition over certain new instructions, but when it comes to smaller flats there remains more supply than demand. However, over the summer we have agreed more flat sales, and it feels as though there is some life in this market.”

Nathan Emerson, chief executive of Propertymark, sees it this way: “Considering factors such as ongoing global unrest, it is positive to see the housing market deliver stability and overall consistency.

“The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability. Across the year to date, there have been many challenges to navigate, with average energy prices climbing, inflation still higher than targeted and the base rate remaining higher than many might prefer.

“A key moment for many households will come with the next base rate decision due mid-month, closely followed by what might be included in the forthcoming Autumn Budget at the end of October.”

And Jason Tebb, president of OnTheMarket, adds:“Broadly stable property values indicate a subdued market as focused buyers prepared to make their move during the usually quieter summer period proved to be price-sensitive in their negotiations.

“However, market resilience continues to be evident even while higher mortgage costs and economic uncertainty bring an element of caution. The market has steadied, helped by a calm hand at the tiller from the Bank of England with consecutive interest rate holds allaying fears and helping with affordability.

“Should mortgage rates remain stable and economic uncertainty eases, this could filter through to renewed activity and sales in the autumn. Inactivity isn’t an option for many, even if a new Prime Minister and another Budget brings an inevitable degree of doubt.”