UK House Prices Increase

U.K. house prices increased for a third month in July as a shortage of supply helped shield the property market from the economic slump, Nationwide Building Society said.

The average cost of a home climbed 1.3 percent to 158,871 pounds ($260,000) after rising 1 percent in June, the mortgage lender said in a statement today. Economists predicted a 0.2 percent increase, according to the median of 14 forecasts in a Bloomberg News survey. From a year earlier, prices fell 6.2 percent, the smallest annual drop since May 2008 , Bloomberg reports.

Meanwhile, Martin Gahbauer, Nationwide's chief economist, said tight supply, pent-up demand and historically low interest rates had been enough to produce a bounce in prices despite the worst recession in decades , New York Times reports.

"There is now a reasonable chance that prices could end the year slightly higher than where they started. Only a few months ago, such an outcome would have appeared unthinkable."

House prices are 6.2% lower than in July last year, but the annual rate of decline has dropped sharply from a peak of 17.6% in February. In June it was running at 9.3% , guardian.co.uk reports.