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House prices up 0.8% in August

House prices in the UK increased by 0.8 per cent during August, marking the sixteenth successive monthly rise.Nationwide's latest index reveals the annual pace of growth rose to 11 per cent, from 10.6 per cent in July.Although this is less than the 11.8 per cent level recorded in June, residential property costs are still outpacing earnings by a wide margin.Robert Gardner, Nationwide's chief economist, said: "At a national level housing affordability does not appear stretched by historic standards, in part due to the low level of mortgage rates. "The cost of servicing a typical mortgage remains close to the long run average as a share of take home pay." The building society says the outlook for the housing market is "highly uncertain". While mortgage approvals fell by almost 20 per cent between January and May, a modest rebound occurred in June.According to reports from surveyors, there has been a moderation in demand in recent months, with subdued wage growth and the possibility of interest rate rises potentially dampening demand further in the months ahead.However, a number of other factors, such as the brightening economic outlook, declining inflation and employment growth could counter these trends.Mr Gardner said the building society expects the first rise in interest rates to come during the first quarter of 2015. Bank of England guidance suggests there will be a gradual rise in rates, settling below the average prevailing before the financial crisis.In addition, the continued restraint of the supply side of the market is expected to provide further support for price increases.Recently, Nationwide carried out research into the effect of transport links on property prices and found that people are willing to pay a significant premium to be close to a station.In London, a house located 500m from a station attracts a 10.5 per cent price premium over an otherwise identical property 1,500m from a station. 

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