House prices in October registered their most substantial monthly surge in over a year, as reported by the Nationwide.

Nevertheless, they remained significantly lower compared to the previous year, according to the UK's largest building society.

The 0.9% monthly upswing in prices was most likely attributed to a shortage of properties to meet the demand, as indicated by the Nationwide.

The housing market continues to exhibit "extremely weak" activity, primarily due to buyers contending with elevated mortgage rates. Nationwide's Chief Economist, Robert Gardner, remarked, "This is not surprising as affordability remains stretched."

Gardner further noted, "Market interest rates, which influence mortgage pricing, have moderated somewhat but they are still well above the lows seen in 2021."

On an annual basis, the average home price declined by 3.3% in October to £259,423, compared to £268,282 a year earlier.

Nonetheless, prices still exceed their pre-Covid levels, which prompted a housing boom driven by individuals seeking more space, benefiting from historically low mortgage rates, and the stamp duty holiday.

In October 2019, the average cost of a UK home stood at £215,368, according to Nationwide.

Although many first-time buyers currently face challenges in securing a mortgage, they are likely to welcome the price correction.

Alice Haine, an analyst at investment platform Bestinvest, stated, "Sky-high borrowing costs and the ongoing pressure on household incomes force some to postpone their home-buying plans due to difficulties in securing a mortgage."

Mr. Gardner anticipated that borrowing costs would remain relatively high compared to the past decade but affirmed that affordability would eventually improve.

"It appears probable that a combination of robust income growth, alongside slightly lower house prices and mortgage rates, will gradually enhance affordability over time, with housing market activity remaining rather subdued in the interim," he concluded.

Last week, Lloyds Banking Group, the owner of the UK's largest mortgage lender, Halifax, projected that UK house prices were likely to decline by 4.7% this year and by an additional 2.4% in 2024 before embarking on an upward trajectory in 2025.

Nationwide's survey data is based on its own mortgage lending and does not encompass cash purchases or buy-to-let deals.

According to the most recent official data available, cash buyers currently constitute more than a third of housing transactions.

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