October price growth 'strongest all year'

House prices rose by 1.1 per cent in October but the underlying strength of the market remains weaker than it was this time last year, according to the latest Nationwide house price index.

The lender's study has revealed that the year-on-year rate of growth also increased this month, up from nine per cent to 9.7 per cent, but added that other indicators continue to suggest a slowdown even though supply remains constricted.

The average price of a home in the UK rose by over £1,400 during October, the study added, rising from £184, 723 to £186,044.

“House prices recorded a surprisingly strong increase of 1.1 per cent in October, tying it with June for the highest month-on-month growth rate so far in 2007," acknowledged Nationwide chief economist Fionnuala Earley.

"The annual rate of price growth picked up from nine per cent in September to 9.7 per cent, but this is still down from a peak of 11.1 per cent in June and was partly driven by base effects.

The rise in the annual rate temporarily breaks the slowing in price growth we have seen since June, but is unlikely to mark the start of a new upward trend," Ms Earley added.

Earlier this week Hometrack reported that prices fell by 0.1 per cent this month, though Your Move asserted that prices were up by 1.2 per cent.

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