Shock news about house prices tend to mean one thing – a downward lurch. But the latest index from the Nationwide has surprised analysts by showing a small monthly rise.

October saw a 0.9 per cent rise in UK house prices, after taking account of seasonal effects. This resulted in an improvement in the annual rate of house price growth – but it’s still down 3.3 per cent on the year, albeit much better than the annual to 5.3 per cent drop recorded in September.

Nevertheless, the Nationwide insists that 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.

The Nationwide’s chief economist, Robert Gardner, 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.”

And Sarah Coles, an analyst at business consultancy Hargreaves Lansdown, insists it does not mean that the housing market is past the worst yet.

“A dearth of property for sale has underpinned house prices in October, as sellers sat on their hands. But this small bump isn’t a sign of a price resurgence round the corner. October’s bump comes down to a shortage of property for sale, making it more difficult for buyers to drive a hard bargain. 

“The relative strength of the jobs market, and the fact that so many people have fixed rate mortgages, means we’re not seeing large numbers of people being forced to sell up. It means sellers aren’t in a hurry to sell in such a difficult market, which is keeping a floor under house prices for now.

“However, at the same time, higher mortgage costs are severely denting our enthusiasm to buy. They’ve eased off from the highs at the start of August, but lower mortgage approvals in September demonstrate that buyers aren’t in a hurry to rush back into the market. It may take more substantial rate cuts to stimulate demand significantly, and at the moment, this isn’t on the cards until well into 2024.”