Nationwide sees house prices rise

Prices appear to be picking up

House prices rose in October according to the latest survey from Nationwide building society.

It said prices increased by 1.3% last month, leaving the average house price at £157,107.

This pushed up the annual house price inflation rate for the first time this year, to 3.3% from 1.8% in September.

However, the society said prices in the three months to October rose by only 0.2% and warned it was too early to say the market had reached a turning point.

Affordability

The Nationwide pointed to August's cut in UK interest rates as one reason for the recent boost to the market.

However, the society's group economist Fionnuala Earley said: "We think that it is far too early to say that prices will continue to accelerate from here."

One of the reasons why the housing market is unlikely to return to the boom seen a few years ago is that "affordability remains stretched," Ms Earley added.

"Affordability and overall debt levels will still have to adjust to more comfortable levels before we can expect any widespread increase in demand and thus prices."

Market signals

Despite the caution of the Nationwide, its survey is the latest suggestion that the property market may be picking up again after the slowdown that began in the summer of 2004.

A month ago, the Halifax bank reported that its own monthly survey had shown annual house price inflation rising to 3% in September.

Since then, the Royal Institution of Chartered Surveyors (RICS) has reported a continued upturn in interest from would-be house buyers, prompted partly by August's rate cut.

And on Monday the Bank of England said the number of new mortgages approved, but not yet lent, had risen in September to its highest level since June 2004.

Mortgage approvals are widely seen a as good indicator of future trends in the market and have been rising steadily since the start of the year.