House prices up 0.7% in October, says Nationwide

LONDON: House prices in Britain rose 0.7 per cent in October, for the eighth consecutive month, according to a report by Nationwide Building Society. However, the annual rate of increase declined slightly to 8 per cent.

The increase further underlines the fact that the interest rate hike in August did not have any impact on the housing industry.

The average price commanded by a British home in October is 169,623, which is 12,500 pounds more than the price a year earlier.

Fionnuala Earley, Nationwide's group economist, warned that rising interest rates, worsening affordability, falling yields on housing investments and lower expectations of future house price growth are all factors that can slow the market in the coming months. But, the momentum built up in the market can ensure relatively strong annual rates of growth in the short term, she said.

Bank of England released data Monday showing mortgage approvals rose to their highest level since February 2004.

The strength of the housing market is one of the factors that the Monetary Planning Committee of the central bank will consider next week when its meets to decide a further hike in interest rates. Most economists feel a rise in the rates is very much on the cards and there could be further rises in the next year.

Interest rate futures show that the bank, which raised its interest rate to 4.75 per cent in August, will increase it twice more by the same amount by March next year to curb inflation

Housing research firm Hometrack said house prices have climbed at the fastest pace in two years in October. Real estate website Rightmove also said average asking prices rose 11.5 per cent from a year earlier.