The housing market is showing signs of “resilience” with prices rising slightly, according to new figures from the UK’s largest building society.

Nationwide said house prices were up 0.4% in May, compared to April.

It said the average cost of a home was now £264,249 – with year-on-year prices also increasing by 1.3%.

The figures represent a rebound in month-on-month prices, after they fell on Nationwide’s index by -0.4% in April and -0.2% in March.

Other lenders have also reported modest falls in recent months.

Nationwide’s chief economist, Robert Gardner, said: “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer-term interest rates in recent months.

“Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”

He added that the upcoming general election was unlikely to have much of an impact on the market in the short term.

Mr Gardner said previous national polls “do not appear to have generated volatility in house prices or resulted in a significant change in house price trends”.

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It comes amid concerns over subdued demand in the housing market due to higher mortgage rates.

Inflation dropped to 2.3% in April – the lowest level in nearly three years.

However, the rate was higher than economists and the Bank of England had forecast – with analysts suggesting it might make a cut in interest rates in June or August less likely.

‘Prices stagnant but will pick up’

Nathan Emerson, chief executive of estate agent body Propertymark, said: “The housing sector has seen a strong start to the year and it’s positive to see further momentum.

“We are conscious there may be a potential slow down across the summer as a knock-on effect following the general election, but with inflation firmly on its journey downward and with scope for interest rate cuts, we may soon see a much welcome influx of highly competitive deals from lenders hit the marketplace.”

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Interest rate cut in June ‘not ruled out’

Andrew Wishart, a senior economist at Capital Economics, said: “Taking a step back, house prices have been flat for a year-and-a-half, with the slight increase in May leaving them in line with their January 2023 level.

“In the near term, house prices will stagnate at best. Delayed expectations of Bank Rate cuts in recent weeks will maintain the upward pressure on mortgage rates.”

He predicted that house prices would increase by 2% this year and 5% in 2025 following expected interest rate cuts.