October saw a rise in the rate of annual house price growth to 2.4%, from 2.2% in September, according to the latest Nationwide house price index.
Prices increased by 0.3% month-on-month, after taking account of seasonal effects.
Robert Gardner, Nationwide's chief economist, said: “The housing market has remained broadly stable in recent months, with house prices rising at a modest pace and the number of mortgages approved for house purchase maintained at similar levels to those prevailing before the pandemic struck.
“Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience, especially since mortgage rates are more than double the level they were before Covid struck and house prices are close to all time highs.
“Looking forward, housing affordability is likely to improve modestly if income growth continues to outpace house price growth as we expect. Borrowing costs are also likely to moderate a little further if Bank Rate is lowered again in the coming quarters.
“This should support buyer demand, especially since household balance sheets are strong – indeed, in aggregate the ratio of household debt to disposable income is at its lowest for two decades."
Karen Noye, mortgage expert at Quilter, commented: "Prices are now 2.4% higher than a year ago, marking a modest improvement that hints at resilience in the face of persistent economic uncertainty.
"After a subdued first half of the year, the housing market appears to be finding its feet. A gentle uptick in prices reflects a degree of confidence returning among buyers and sellers, supported by greater stability in mortgage rates and growing expectations that interest rates have now peaked. However, the optimism remains fragile. With the Budget looming and rumours swirling about possible housing tax changes, many buyers are taking a cautious approach, waiting to see whether the goalposts are about to shift.
"Inflation is still uncomfortably high for the Bank of England, but signs of cooling price pressures elsewhere could open the door to rate cuts next year. That would provide some long-awaited relief for borrowers, although affordability pressures remain significant for first-time buyers, who are still grappling with high deposits and mortgage repayments that swallow a large share of income.
"If the Chancellor uses the Budget to target wealthier homeowners or property investors, that could stall activity at the top of the market, which often sets the tone for the rest of the housing ladder. For now, though, the market appears to be holding its balance, with low supply providing a natural floor for prices even as demand remains constrained.
"The message from October’s data is one of quiet resilience. The housing market has weathered a year of volatility and high borrowing costs, and while there is little sign of a rapid rebound, the gradual improvement in sentiment shows buyers are beginning to believe the worst may be behind them.
Jonathan Hopper, CEO of Garrington Property Finders, added: “At a national level, price growth has moved from a standstill to shuffling pace. This is as surprising as it is welcome.
“While it feels more like stagnation than a celebration, months of slowly rising or flat property prices have quietly dragged the property market to an important milestone.
“Nationwide’s data shows that as average wages have risen steadily over the past year, homes have become more affordable. For the first time in over a decade, the price of the average home has fallen back to 5.6 times the average salary.
“This takes the ratio between prices and earnings back to the average level of the past 25 years. People are earning more, and as wages outpace house prices and borrowing gets cheaper, more people can afford to buy.
“While the market is far from back to normal, and pre-Budget jitters have had a chilling effect on sentiment, in recent weeks we’ve seen many buyers re-engage.
“These buyers sense that now is a good time to capitalise on reduced levels of competition and high levels of supply - which in many areas have been accumulating for months - to pounce on the best stock and negotiate hard on price.
“There’s a split forming between buyers too. Many family buyers looking in more expensive areas, who feel they would have most to lose from the Chancellor’s rumoured changes to property taxes, have hit the pause button.
“Meanwhile first-time buyers and those looking at lower value properties are more active, and leaning into the abundant choice offered by the current buyer’s market to take their time and pay not a penny more than they feel a property is worth.
“Fears over what the Budget might hold have not been good for the market, but they have generated pockets of activity and momentum among buyers who feel the current window of opportunity outweighs the risk.”
