UK house prices rose at their fastest rate in four months during October, mortgage lender Nationwide has said.

Prices rose 1.1% in October from the previous month, taking the average house price to £186,044, it said.

On an annual basis, house prices rose by 9.7% from the same month in 2006, up from September's figure of 9%.

However, the Nationwide said that it would be "misguided" to view the rise as proof that house prices were immune to problems in the financial markets.

Propped up

House prices in the three months to October rose by 1.9% compared with the previous three months, up from September's figure of 1.7%.

The three-month on three-month figure is often seen as a more accurate gauge of underlying price movements.

According to the Nationwide, house prices are currently being supported by a number of factors, including the low level of properties coming onto the market.

"Different factors could be driving the low level of instructions, including a reluctance to trade up amid current uncertainties and the fact that low unemployment is limiting the number of forced sales," said Nationwide chief economist Fionnuala Earley.

"The overall result is that the stock of unsold homes is still relatively low, and this is providing some residual support to prices," she added.

Other commentators viewed the Nationwide's figures with surprise.

"[It] seems at odds with the growing evidence of weaker buyer confidence, slowing mortgage demand and easing house price pressures shown by most other housing market indicators," said research firm Capital Economics.

"As such, we would be wary of interpreting today's data as evidence that the housing market remains robust," it added.

But Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors, said the Nationwide's survey should be taken seriously.

"The endless talk of the demise of the property market is, at the very least, a little premature," he said.

"The 1.1% gain in prices in October represents the highest month-on-month increase this year and provides a stark contrast to the fears of outright price declines."

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