Good News that U.K. house prices climbed 0.5 percent in October, marking the sixth consecutive monthly rise.
However The Nationwide Building Society said that the strong upward momentum in property values seen over the summer is showing some signs of moderating.
The rate of change between three-month periods, generally considered a smoother indicator of the near term trend, dropped back slightly from 3.8 percent to 3.4 percent.
"A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run," said Martin Gahbauer, Nationwide's Chief Economist. "Although too early to tell for sure, it may also reflect a more natural level of stock available for sale coming to the market, alleviating some of the extreme shortages of property on the market seen during most of this year."
Rachel Waring and Mark Hughes, analysts at Panmure Gordon & Co., said the low numbers of properties for sale had boosted home values recently, and that prices could ease as supplies normalize.
They also cautioned that the Financial Services Authority, the government regultator, has called for stricter controls on lending. "This makes it difficult to see any significant rebound from current levels, and reiterates our belief that any recovery will be slow and steady," Hughes and Waring wrote.
Gahbauer added that last week's gross domestic product figures, showing that the British economy remained in recession, have mixed implications for the housing market.
On one hand, a deeper and longer recession implies higher levels of unemployment and a longer period of subdued wages, both of which will act as constraints on the housing market's recovery.
On the other hand, the figures mean that interst rates are likely to remain at or near their current record lows for well into next year, making mortgage affordability more favourable.
