House prices in surprise 0.5% rise in April

UK house prices rose by 0.5% in April after seven consecutive months of falls, according to the Nationwide building society.

Economists had been expecting average prices to decrease during the month.

Prices had been falling since August last year, after Liz Truss's mini-Budget sparked turmoil on financial markets and drove up borrowing costs.

Nationwide is predicting a "modest recovery" in the housing market as mortgage rates start to come down.

But it said any improvement would be "fairly pedestrian", as household finances remain under pressure and average earnings have been failing to keep pace with inflation.

The cost of an average home rose by 0.5% between March and April to hit £260,441, the mortgage lender said.

However, that was still 2.7% lower than a year ago.

Conditions in the housing market had "taken a while to settle down" since the mini-Budget, it said.

In September, former chancellor Kwasi Kwarteng promised billions of pounds of tax cuts without explaining how they would be paid for.

Rates are now "well below" the highs seen in the autumn, Nationwide said, but they remain more than double what they were a year ago.

However, the number of mortgages being approved was picking up after a "subdued" start to 2023, said Robert Gardner, the building society's chief economist.

Households are also feeling more confident about their finances while general economic conditions are predicted to improve as the year goes on, he said.

"If inflation falls sharply in the second half of the year, as most analysts expect, this would likely further bolster sentiment," Mr Gardener said.

"This, in turn, would also be likely to support a modest recovery in housing market activity."