UK house prices up 1.6 pct mm in Aug, fastest in 2-1/2 yrs

British house prices rose for the fourth month running and at their fastest monthly rate in 2-1/2 years in August, the Nationwide Building Society said on Thursday, in a further sign the housing market is picking up.

The mortgage lender said house prices rose 1.6 percent this month after a 1.4 percent rise in July. This too the annual rate of decline down to 2.7 percent — its smallest since April 2008 — from 6.2 percent and leaving the average price of a home at 160,224 pounds ($262,000).

House prices have been supported recently by a lack of homes coming onto the market, alongside a tentative pick-up in interest from people wanting to buy. Other surveys have also shown prices picking up from last year's slump.

Nationwide chief economist Martin Gahbauer said record low interest rates had prevented homeowners from falling into arrears with their mortgages and therefore meant fewer people were forced to sell their homes than in past downturns.

This had contributed to moving the balance of supply and demand more in favour of sellers this year, he noted.

"However, the eventual exit from exceptionally loose monetary policy could make the recovery in the housing market bumpier than some might expect after the last few months of price increases," Gahbauer said.