House prices have inched up by a better-than-predicted 0.4% this month, according to Swindon-based Nationwide building society, but they are expected to ease again over the next 12 months as activity remains subdued.
The month-on-month rise is the third straight monthly increase. In a year-on-year basis, the increase was 1.6%, beating a forecast of 1.3%.
But Nationwide said the increase highlighted a lack of housing supply rather than any real pick-up in demand and prices were likely to be stagnant or fall slightly in the next 12 months.
Nationwide chief economist Robert Gardner said: “House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook.
“But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next 12 months.”
Home purchase activity is still well below the levels of before the 2008/09 financial crisis and Nationwide said conditions have got worse over recent months as confidence levels among consumers have slumped further.
The figures come ahead of Chancellor George Osborne’s Autumn Statement this afternoon which will confirm very sluggish growth for the economy.
