House prices up in October

House prices increased by 1.3 per cent in October, reversing the falls seen in the previous two months, according to Nationwide.

The building society's latest property survey found that last month's upturn raised annual growth to 3.3 per cent, up from 1.8 per cent in September.

However, growth remains subdues compared to last year's annual growth rate of just over 15 per cent.

Nationwide attributed the growth in house prices and activity to August's interest rate cut. The price of an average house in the UK is now£157,107 compared to £152,159 this time last year.

Fionnuala Earley, Nationwide's group economist said it was "far too early to say that the market has reached a turning point and that prices will continue to accelerate from here".

The housing market is unlikely to boom, she explains, because "affordability remains stretched".

"Low inflation and credible, transparent monetary policy has led to lower debt servicing costs which might mean that we should expect a higher "normal" level of house prices in relation to earnings than in the past," she added.

"However, 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."

She also explained her caution on the short-term effect of the interest rate cut, and the uncertain economic environment.

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