House prices in September rose their fastest in eight years
But it is too early to predict what impact the US attacks will have on the property market, despite last month's sharp increases, Nationwide researchers said.
"The tragic events in the US on 11 September will have an impact on the housing market, but much depends on the outlook for the US economy and its impact on economies across the world including the UK," said Alex Bannister, Nationwide's group economist.
Separate figures released by the Bank of England showed mortgage lending hit a record £5.05bn in August, although consumer credit unexpectedly slowed, growing by £1.2bn, well below the £1.4bn predicted by analysts.
Uncertainty
Despite the strong gains in house prices, the Nationwide was leaving its forecast for house price growth for 2001 unchanged at 11% due to the high degree of uncertainty following the terrorist strike.
"It is possible that the housing market may slow more quickly and recover more slowly than we originally envisaged, but in reality it is too early to forecast with any confidence," Mr Bannister said.
Nationwide said that while events in the US had increased the risk of recession there, the key issue was whether US consumers remained confident enough to keep the economy going.
A recession in the US would damage prospects for the UK housing market, it said, with London feeling the impact first and most significantly.
But Nationwide added that while house price growth in London looked set to reduce sharply, it would be some time before the slowdown was seen.
With equity markets volatile, people were likely to continue transferring money from shares into assets such as property which are seen as safer investment havens, researchers said.
'Affordability remains good'
Nationwide said it did not expect house prices in the capital to fall.
And mortgage rates would have to rise by 7.5 percentage points - equating to a rise in interest rates to 13.5% - for Londoners borrowing three times their income to come under the same payment pressure as before the last housing market recession.
For the UK overall Mr Bannister said: "While house price growth will reduce significantly next year, we still view the prospect of prices falling as extremely slim, even if economic conditions are worse than we expect, because affordability in much of country remains good."
He added that sharp falls in the stock market and worries about job security could reduce consumer confidence.
This may cause people to rein in their spending and borrowing plans, which could produce a sharper slowdown in house price growth than previously expected.
But previous military conflicts had not had much impact on the housing market unless they radically altered economic conditions, Mr Bannister said.
The Falklands and Gulf wars, and the Bosnia campaign, all had little direct influence on the market.
Previous military conflicts
The Nationwide survey was credited with assisting a rise in sterling. which rose to a two-week high against the euro in early trade on Monday.
Nick Parsons, currency strategist at Commerzbank, said: "The pound has got some support from a surprisingly strong Nationwide house price survey as well as speculation of merger and acquisition activity."
Rising house prices are likely reassure policy makers that consumer demand in Britain remains relatively robust, potentially protecting the country's economy from a global downturn.