Nationwide: House prices up by 0.6% in October

UK house prices rose by 0.6 per cent in October, according to the latest Nationwide house price index.

This means the average house in the UK now costs £164,153, a 0.9 per cent decline on 12 months ago.

House prices remain 11.8 per cent below their October 2007 record high.

Howard Archer, Chief UK & European Economist at IHS Global Insight said: “The chances are rising that house prices will essentially stabilize over the coming months, although the risks are still slanted to the downside and any significant turnaround in house prices still looks some way off.”

Economists had expected to see a rise of just 0.2 per cent after a 0.4 per cent fall in September which showed a 1.2 per cent annual decline.

Nationwide said that monthly price changes have failed to establish a “strong trend” in either direction in the last six months.

Robert Gardner, Nationwide's Chief Economist, said: “The annual pace of change continues to display a picture of relative stability, with house prices down just 0.9% compared to October 2011. This maintains the pattern that has been evident since late 2010.”

Looking ahead, most economists expect house prices to remain unchanged or to fall slightly over the next 12 months.

Although the UK has now officially emerged from its double-dip recession, this was partly down to one-off factors and the economy still faces a difficult environment to maintain growth in the next 12 months.

Mr Gardner said: “With households and the public sector focused on repairing their finances rather than spending, the economic recovery is likely to remain fairly sluggish, especially since headwinds look set to intensify in the quarters ahead.

“This in turn suggests that the situation is likely to remain challenging in the housing market,” he added.

It is likely that mortgage availability will be enhanced by the Bank of England’s Funding for Lending Scheme (FLS).

Howard Archer said: “Mortgages look like become increasingly available helped by the “Funding for Lending” scheme launched at the start of August by the Bank of England. The Bank of England’s latest credit conditions survey indicated that banks plan a big rise in mortgage availability during the fourth quarter after a substantial increase in the third quarter.”