UK house prices rebound 0.6% after 0.4% fall last month

Nationwide figures show ‘relative stability’ in annual rate of price change while mortgage approvals remain low

House prices in the UK jumped by 0.6% in October, more than offsetting the previous month’s 0.4% fall and bringing the average cost of a property to £164,153, according to Nationwide building society.

The lender’s monthly house price index showed prices were down 0.9% year-on-year, but the three-month figure moved into positive territory for the first time since January and showed a 0.5% rise.

Nationwide’s chief economist, Robert Gardner, said while monthly figures had failed to show any strong trend, with three months of rises and three months of falls since May, the annual rate of change showed “a picture of relative stability”.

However, Gardner said that while the UK had exited recession this month, continued problems in the eurozone and the US would hold back exports, meaning a sudden rise in house prices was unlikely.

“Although the UK economy has been adding jobs in recent quarters, even in the midst of recession, conditions remain very difficult for households,” he said.

“Wage growth is still not keeping up with the cost of living and unemployment is still well above normal levels. This helps to explain why housing market activity has remained subdued, with the number of mortgage approvals still running at little more than half their long-run average.”

Nationwide’s figures are based on mortgages it has approved over the month. Borrowing remains sluggish, despite the government’s efforts to boost the number of loans available by offering banks and building societies cheap funds through the Funding for Lending scheme.

Figures from the Bank of England show a total of 50,024 house purchase loans were approved in September, compared to a long-term average of more than 80,000 a month.

Hilary Osborne

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