Annual house price gains surged to a 21-month high in November, the Nationwide reported today, providing more evidence that the housing market has shrugged off recent higher borrowing costs for homebuyers.

A 9.6 per cent jump over the past year means the price of the average house has increased by £15,046 - or £41 a day - to stand at £172,185, the Nationwide said. The annual pace of house price gains increased from 8 per cent in October and 3 per cent at the end of 2005.

The annual jump came as house prices rose by 1.4 per cent in November from October. The figures were well above economists' forecasts for a monthly gain of 0.7 per cent and a year-on-year rise of about 8.3 per cent.

The strong Nationwide data follows figures from the Bank of England yesterday that showed mortgage approvals, seen as an indicator of future demand, hit a near three-year high in October.

Howard Archer, chief UK economist at Global Insight, said: "Ongoing strong mortgage activity and a shortage of supply in many areas (notably London and the South East) means that house prices are likely to remain buoyant in the near term at least as pricing power is currently significantly tilted towards the vendor."

Mr Archer added that the booming housing market could figure in the Bank's discussions on interest rates.

He said: "While the Bank of England has recently played down the role of house prices in its setting of interest rates, it will nevertheless be concerned about their ongoing strength."

This month the Bank lifted interest rates by 0.25 percentage points, to 5 per cent, the second such increase in three months.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts