The latest house price index from Nationwide revealed values had increased by 0.5% in April following seven consecutive falls.
However, over the year house prices had fallen by 2.7% and prices were still 4% below their August 2022 peak, Nationwide’s report showed.
In the UK the average property price, according to Nationwide, is now £260,441.
Robert Gardner, chief economist at Nationwide, said the data showed there were ‘tentative signs of a recovery’ in the property market.
He said whilst mortgage approvals plunged at the start of the year, they were now showing signs of picking up. What’s more he thinks if inflation falls sharply in the second half of the year – as predicted – this could boost consumer confidence.
“This, in turn,” he said, “would also be likely to support a modest recovery in housing market activity.
“But any upturn is likely to remain fairly pedestrian, as it will take time for household finances to recover, since average earnings have been failing to keep pace with inflation, and by a wide margin over the last few years.
“Mortgage interest rates are also likely to act as a headwind. While they are well below the highs seen in the wake of the mini-Budget last year, rates are still more than double the level prevailing a year ago.
“Nevertheless, if gains in nominal incomes remain solid (wage growth has been running at above 7% in the private sector), this, together with weak or declining house prices, will help improve housing affordability over time, especially if mortgage rates continue to trend lower.”
‘A positive sign’ but any recovery is set to be slow
Nicky Stevenson, managing director at national estate agent group Fine & Country, thought these figures were positive. She said: “April’s small rise in house prices is a hugely positive sign, coming after Nationwide reported several months of falling prices even as other indices suggested the opposite was happening.
“The property market is proving much more resilient than people anticipated, even though household finances remain tight and inflation is still stubbornly high.”
But consumers were also warned any ‘recovery’ of property prices and mortgage rates affordability would be slow.
Indeed, Alice Haine, personal finance analyst at Bestinvest, said with the Bank of England expected to raise interest rates again later this month in its bid to reduce inflation, the property market was ‘not out of the woods yet’.
“While homeowners may be hoping that house-buying activity continues to pick up from here, affordability is still a major challenge,” she said.
“The combination of high inflation and borrowing costs and falling real wages mean buyers simply cannot afford as much as they could a year ago.”
Haine added: “With interest rates expected to rise to 4.5% next month when the Bank of England’s Monetary Policy Committee meets again, and the potential they could go up even further if inflation does not retreat as fast as hoped, there is unlikely to be any respite for borrowers in the short term, particularly for those on variable products who will receive an instant rise in their repayments.”
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