UK house prices rose during August at a much faster monthly pace than expected, according to a survey by Nationwide on Friday that contrasted with other signs of cooling in the housing market.
The mortgage lender said house prices rose 0.8% on the month in August compared with a 0.2% rise in July. Economists polled by Reuters had expected an increase of 0.1%.
House prices rose 11.0% on an annual basis, up from 10.6% in July – again outstripping forecasts for a 10.1% increase.
Robert Gardner, Nationwide's chief economist, said house price growth continues to outpace earnings by a wide margin and "the outlook for the housing market remains highly uncertain" with interest rate rises looming – the lender expects a first rise in the first quarter of 2015.
However, at a national level, Garder said that "housing affordability does not appear stretched by historic standards", because of the historically low levels of mortgage rates. The improving economic outlook will provide ongoing support for housing demand, he added.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "August proved to be a decent month for the housing market, even though it is traditionally a quiet time of year when not much gets done. Prices continued to edge up slightly, while we had one of our best months for new business - emphasising the continued strength of the London property market in particular."
But, according to a survey from Hometrack also released on Friday, the gap between house sellers' asking prices and the amounts buyers are willing to pay is widening amid growing signs the market is cooling, the property analyst Hometrack has reported.
Sellers in England and Wales typically achieved 95.9% of their asking price in August, falling back for the third month in a row from 96.8% in May.
House prices increased by 0.1% month on month for the second month in a row in August, according to Hometrack, which said that weakening demand from buyers and an increasing supply of properties for sale meant properties were lingering on the market for longer and sellers were having to accept bigger discounts.
Hometrack said that the findings suggest that the market will see the momentum of house price growth slowing in the coming months, as opposed to prices starting to fall.