UK house prices increased by 0.6 per cent in October, more than offsetting the 0.4 per cent decline recorded the previous month, Nationwide’s monthly house price index has revealed.
In October, the average price of a property was £164,153.
Robert Gardner, chief economist at Nationwide, said: “The annual pace of change continues to display a picture of relative stability, with house prices down just 0.9 per cent compared to October 2011.
“This maintains the pattern that has been evident since late 2010, with annual price growth remaining in a narrow band between +1.5 per cent and -1.5 per cent on all but two occasions over the past two years.”
Although the UK has exited recession, economic conditions still provide a “challenging backdrop” for the housing market.
Mr Gardner said: “Indeed, UK economic output is still slightly below the level prevailing twelve months ago and more than three percentage points below its 2008 level.
“Therefore, while the data on economic growth suggests that the UK economy has not been performing quite as poorly as feared, there is little doubt that it remains extremely fragile.”
He warned that clouds are gathering over the global outlook as eurozone business surveys point to a further slowdown in the UK’s key trading partners on the continent, while the US economy is also struggling to gain momentum. This threatens to hold back exports at a time when the UK is looking to international trade to drive its economy forward, Mr Gardner said.
He added: “This in turn suggests that the situation is likely to remain challenging in the housing market. Although the UK economy has been adding jobs in recent quarters, even in the midst of recession, conditions remain very difficult for households.
“Policy measures such as the Bank of England’s Funding for Lending Scheme, which is helping to keep down mortgage rates, should provide support for mortgage lending.
“Nevertheless, housing market conditions are likely to remain fairly subdued until there is a sustained improvement in the wider economic environment.”