In October, the price of a typical home was 0.8 per cent higher than 12 months ago, taking average house prices to £165,650.
Robert Gardner, chief economist at Nationwide, highlighted that given the “challenging economic backdrop”, the latest data is “encouraging”.
However, he warned that the data does not fundamentally change the picture of a housing market “that is treading water”.
He claimed that property transaction levels remain subdued and prices essentially flat compared to last year.
Mr Gardner said: “The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish, house price growth is likely to remain soft in the period ahead, with prices moving sideways or drifting modestly lower over the next twelve months.
“Overall the pattern of transactions has been fairly stable, but the data indicates that there had been an increase in the proportion of sales occurring in more affluent areas and a similar reduction in less affluent areas.”
Mr Gardner emphasised that there was a correlation between trends in activity and employment.
He said: “For example, there has been a six per cent rise in employment in professional occupations since 2008, which is likely to have helped support housing market activity in ‘wealthy achiever’ neighbourhoods.
“Over the same period, employment amongst process, plant and machine operatives has fallen 13 per cent. Coupled with negative real wage growth, this is likely to have dampened activity amongst ‘moderate means’ and ‘hard pressed’.”
Nicholas Ayre, director of the property buying agency Home Fusion, claimed that average prices have “finally recovered” to where they were at this time last year.
He said: “But that can’t mask the fact that the number of sales is still paltry and the market is essentially stagnant.
“Demand is weak and, in many areas, so too is supply, as sellers hold off trying to sell in such an obviously lousy climate.
“If unemployment continues to rise, then we could see more properties come onto the market as people are forced to sell. This could provide further downward pressure on prices.
“The property market feels a little surreal at present, but while no one will be popping champagne corks today, these latest figures hint that there is still life in the old dog yet.”