UK house prices suggest London market heating up

British house price growth has accelerated and there were signs the market in London is heating up again, mortgage lender Nationwide said, adding to evidence the housing market has regained momentum.

House prices in the UK rose 0.5% month-on-month in September, slightly more than expected in a Reuters poll and up from 0.4% in August. On an annual basis, they rose 3.8%, from 3.2% last month.

The figures are the latest to show Britain’s housing market is picking up after a dip last year. Official data this week showed British mortgage lending increased last month by the greatest amount since 2008.

Nationwide said house price growth in London accelerated sharply in the third quarter, hitting 10.6% compared with 7.2% in the second.

“The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth,” Nationwide chief economist Robert Gardner said.

“However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”

Last week the Bank of England’s Financial Policy Committee said they expected house price inflation to pick up in the coming months.