Major building society Nationwide has identified a record high for UK house prices that was reached in October. Last month saw the average price of a UK property hit £189,333. The previous month saw a drop in house prices, which fell by 0.1% through September. Previous figures from the Land Registry suggested a 0.2% drop, but Nationwide's new seasonally-adjusted figures have revised this decrease downwards. The month of October neatly undid the drop, and raised prices to new highs with overall growth of 0.5% over the course of the month.

The new record level of £189,333 beats the previous record high, which was reached in August, by just £27. However, following the previous fall in house prices October exceeded September's figure by little less than £1,000. However, the annualised growth rate of prices has decelerated to 9%, a drop of 0.4%, and looks set to continue a downward trend, according to the building society's most recent data. This marks the second month in a row where the rate of growth in UK property prices has dropped. Furthermore, the number of new buyer enquiries is also shrinking, most notably in London. According to the building society's chief economist Robert Gardner, this could cause the capital's market to suffer. Gardner said: "A variety of indicators suggest that the market has lost momentum. The number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year. Some forward-looking indicators, such as new buyer enquiries, suggest that activity may soften further in the near term, especially in London."

Nonetheless, Nationwide remains optimistic about the prospects of the market picking up again in the not-too-distant future. Following on from the above remarks, Gardner went on to note that "broader economic indicators remain positive. The labour market has continued to improve, with the unemployment rate falling to 6% in the three months to August and mortgage rates have fallen back towards all-time lows. Indicators of consumer confidence have also remained close to recent highs." As long as there is no sudden increase in mortgage rates, Gardner believes that continued health for the labour market and wider economy could lead activity in the property market to recover within the next few quarters.

A more gradual rise in interest rates, on the other hand, Gardner believes that the housing market will be able to bear if the economy stays in good shape. Chief economist for the Bank of England Andy Haldane suggested recently that no interest rate rise should be expected until next year, and that when increases do come they will indeed be implemented gradually. Similar views have been recently expressed by HIS Global Insight's chief UK and European economist Howard Archer. Archer agrees that prices are likely to keep rising but more gradually, and said that "buyer interest in houses is unlikely to fall away with… elevated consumer confidence, markedly rising employment, and still low mortgage interest rates."