Prices rose by 0.8% in August to an average of £189,306. This compares to a smaller monthly rise of 0.2% in July.
The annual house price growth of 11% “continues to outpace earnings by a wide margin”, noted Nationwide’s Chief Economist, Robert Gardner.
Lower mortgage rates are helping to keep affordability levels within range, despite rising prices.
“The cost of servicing a typical mortgage remains close to the long run average as a share of take-home pay,” Mr Gardner said.
However, the outlook for the housing market “remains highly uncertain”, he added.
A sharp fall of 20% in the number of mortgage approvals between January and May had given rise to suggestions that mortgage activity was starting to moderate.
But a rebound over the summer has left it unclear if, or how much, the introduction of the Mortgage Market Review in April has contributed to the slowdown.
What Contributes towards Higher Prices?
Nationwide’s latest index also addressed some of the factors that determine property values.
The mutual’s research found that people are more likely to pay substantially more to be close to a station.
This is particularly pronounced in London, where a property located within 500 metres of a station can sell for 10.5% more than a similar property over a kilometre away – the equivalent of £42,000.
Living near a station can boost prices by up to £42,000 in London, Nationwide believes.
Similarly, research from Lloyds Bank released this week has found that people will pay almost £500,000 to live near one of the best state schools in the country.
Homes located near Beaconsfield High School in Buckinghamshire fetch £483,031 – a premium of over one-and-a-half times the average house price in neighbouring areas.
Living within the catchment area of the top 30 state schools in England brings an average house price of £268,098, representing an average premium of £21,000.
Marc Page, mortgages director at Lloyds Bank, said parents were not put off by higher prices if it meant their child had a better chance of attending a particular school.
“There is strong competition for properties in areas where state schools are providing top quality education, often in locations with limited supply, which is supporting prices,” he said.