House prices rise despite credit crunch

House prices in the UK appear to have been unaffected by the recent credit crunch caused by the Northern Rock bank crisis.

The reasonable gain of 0.7 per cent between August and September defied expectations of doom and gloom following the fallout of recent events.

Despite the unexpected news, property prices now have the lowest recorded growth since June 2006.

Fionnuala Earley, Nationwide’s chief economist said: "The financial turmoil that began in early August extended into September, dampening hopes that the uncertainty sparked by the crisis would blow over quickly.

"Higher wholesale funding costs are now clearly leading to a reassessment of the pricing of credit in the mortgage market.

"As expected, this has not had an immediate impact on house prices, but the longer-term effect will undoubtedly be to take some of the froth out of the market."

Meanwhile, the Post Office has launched its will enter the mortgage market in the north of England.