On an annual basis, price growth was steady at 2.2%, only marginally higher than the 2.1% recorded in August

UK house prices rose more than expected in September, despite concerns about affordability as mortgages edged higher in recent weeks.

The average cost of a home jumped 0.5% on a month-on-month, according to Nationwide’s latest house price index, released on Wednesday. This was more than the consensus forecast of a 0.2% monthly rise, according to Capital Economics.

On an annual basis, price growth was steady at 2.2%, only marginally higher than the 2.1% recorded in August.

The average price of a residential property now stands at £271,995, compared to £271,079 in August.

Robert Gardner, Nationwide’s chief economist, said: The broad stability in the annual rate of house price growth over the past three months mirrors that of activity. The number of mortgages approved for house purchase has been hovering at around 65,000 cases per month, close to the pre-pandemic average despite the higher interest rate environment.

Despite ongoing uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive, he said.

Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing costs are likely to moderate a little further if the bank rate is lowered in the coming quarters as we, and most other analysts, expect, he said.

On a quarterly basis, Nationwide’s data showed that most regions saw a modest slowdown in price growth in the three months to September.

Karen Noye, a mortgage expert at Quilter, said: The market is still just grinding forward rather than racing ahead. Lower inflation and an improving real-income picture are helping confidence, but affordability remains the binding constraint and any progress is likely to be gradual.

She added: On mortgage rates, the big picture is that markets expect the Bank of England to ease through 2026, but pricing is guided by swap rates and bank funding costs, which have been volatile.