House prices slip back slightly

House prices slipped back by 0.4% in September, the Nationwide has said, although it added that the housing market remains relatively stable.

The average price of a house last month was £163,964 following a shock 1.1% jump in month-on-month prices in August, the building society said.

House prices are 1.4% lower than they were a year ago, a rate which has been fairly consistent throughout the last 12 months, the Nationwide said.

Chief economist Robert Gardner said: "We expect the UK economy to see a gradual recovery over the next 12 months, with house prices remaining relatively flat or declining only modestly over the same period."

Looking ahead, the lender said the Bank of England's £80 billion Funding For Lending scheme should support the sector and ensure the availability of credit.

However, the initiative is still in its early stages and there has been mixed evidence as to whether or not it has increased the availability of mortgages for people with lower deposits and first-time buyers.

Mr Gardner added that a number of measures suggest that UK housing supply remains low relative to demand.

He added: "House prices are still fairly high relative to people's incomes, at least by historic standards. There are also signs of supply constraints in the rental market."

Nationwide added that there has been only a tentative pick-up in house-building activity after the sharp falls seen in the wake of the financial crisis.

In a separate release giving quarterly data, the building society said 10 out of 13 UK regions saw annual price falls in the third quarter of 2012. London, the outer South East and the North were the only regions not to experience a drop in prices. Northern Ireland suffered the most severe drop - 9.3%.