House price growth robust

Weakening demand has failed to dent house price growth, with figures up 1.1 per cent in October.

Nationwide Building Society said the "surprisingly strong increase" equalled the gain seen during June, making it the joint-biggest monthly rise so far during 2007.

At the same time, annual house price inflation bucked its recent downward trend and increased to 9.7 per cent, up from 9 per cent in September.

The news comes amid mounting evidence that the housing market is slowing down in response to five interest rate rises since August last year and tighter lending conditions by banks and building societies.

Nationwide played down the apparent strength of its figures, saying the increase in annual house price inflation was unlikely to mark the start of a new upward trend.

Fionnuala Earley, Nationwide's chief economist, said: "While some may be tempted to interpret October's numbers as a sign that house prices are immune to deteriorating affordability and tightening credit conditions, such a conclusion would be misguided."

She added: "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.

"Slowing demand, however, will not have an immediate impact on prices if homeowners are in no rush to sell."

Nationwide said unless there was a 1990s-style shock to the property market, house prices were unlikely to fall.

Earlier this week property information website Hometrack said house prices fell by 0.1 per cent during October, the first fall for two years.

At the same time, the Bank of England said just 102,000 mortgages were approved for house purchase during September, the lowest level since July 2005.

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