Britain's house prices continue to rise in August

House prices in Britain showed a continuous growing momentum in August, increasing by 0.6 percent over the previous month and 3.5 percent over the same period of last year, according to a house price survey report issued by the Nationwide building society on Friday. The rises of house prices in August brought the average home price to 170,514 pounds, said Nationwide. Nationwide's chief economist Robert Gardner attributed the rise to a number of factors including increasing consumer confidence in recent months, modest gains in employment, and signs of economy recovery. "Recent guidance from the Bank of England's Monetary Policy Committee (MPC), that it intends to keep interest rates on hold at least until the unemployment rate reaches 7 percent, may also help support confidence amongst potential buyers," Gardner said. "However, despite this guidance, there is still considerable uncertainty as to the future path of Bank Rate. The Bank of England's central forecast is that the unemployment rate will not reach the threshold level of seven percent, but financial market indicators continue to point to a first rate hike in mid-2015." The shortage of supply also contributed to the continuous rises of house prices, he said. "While there have been encouraging signs that house building is starting to recover, construction is still running well below what is likely to be required to keep up with demand," Gardner said. New housing starts in England were up 33 percent in the second quarter compared to the same period of 2012, but this is still 36 percent below the levels in 2007, which were already below that required to keep pace with household formation. "The risk is that if demand continues to run ahead of supply, affordability may become stretched. While house prices are still elevated compared with incomes, affordability is being supported by the ultra low level of interest rates," Garner said.