House prices up annual 5.9 percent

A man walks his dog past a residential street sign in London December 1, 2008. REUTERS/Toby Melville

LONDON (Reuters) - House prices rose for an eighth consecutive month in December to end the year nearly 6 percent higher than they started it, mortgage lender Nationwide said on Thursday.

However, the monthly rise of 0.4 percent was the smallest since April and the lender cautioned that the outlook for 2010 remained uncertain.

Martin Gahbauer, Nationwide’s chief economist, said a moderation in the three-month on three-month rate -- a smoother indicator of the near-term price trend -- suggested the pace of price rises was slowing.

“House price increases toward the end of the year moderated in comparison to those seen in the summer,” he said.

But he admitted this year’s recovery in Britain’s property market, fuelled by record-low interest rates and tight supply, had taken most forecasters by surprise.

At 162,103 pounds, the value of the average property remains 12.2 percent below its cyclical peak in October 2007 but has rebounded by 8.9 percent since February.

December’s annual rise of 5.9 percent was the highest since November 2007, according to the Nationwide index.

Reporting by Christina Fincher; Editing by Andy Bruce