Prices rose 1.1 per cent in October from the previous month, taking the average house price to £186,044, according to the latest Nationwide House Price report.
On an annual basis, house prices rose by 9.7 per cent from the same month in 2006, up from September’s figure of 9 per cent.
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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.
Fionnuala Earley, Nationwide’s Chief Economist, said: “Most leading indicators of housing market activity are continuing to weaken. Surveyors are reporting the weakest levels of new buyer inquiries in many years and mortgage approvals are falling from recent highs amid weaker demand and tighter lending criteria for riskier borrowers.”
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Although, according to a BBC Two series investigating house price myths, a major decline in house prices will not change the spending patterns of the British public.
The study of 1,000 Brits revealed that 88 per cent believe a price fall of 10 per cent or more would make no difference to spending on everyday items such as groceries.
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The Nationwide report also revealed that slowing demand won’t have an impact on prices if home owners rush to sell.
New instructions to sell have, in fact, been falling since May, when there had been a temporary surge of property onto the market.
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Earley said: “Different factors could be driving the low level of instructions, including a reluctance to trade up amid current uncertainties and the fact that low employment is limiting the number of forced sales.
“The overall result is that the stock of unsold homes is still relatively low, and this is providing some residual support to prices. The underlying dynamics of the amrket, however, are clearly not as strong as this time last year.”
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