House prices increased nearly twice as fast as expected in October, rising by 1.2 per cent, marking the fourth monthly rise, according to Halifax, the mortgage lender.

Since the beginning of the year, house prices have risen by 2.9 per cent and October's increase exceeded the 0.7 per cent expected by analysts. The average house price now stands at £165,528.

However, the three month average price is down 4.7 per cent compared with the same period last year and Martin Ellis, Halifax's housing economist, cautioned that much of the recent rise in house prices was because there were too few homes on the market to meet demand.

Mr Ellis said that prices were now 7.1 per cent higher than their trough in April after a 23 per cent fall from the previous August and that the demand for homes had been rising because of low interest rates, reduced property prices since summer last year and the low level of properties available.

He said that there were some indications that more people are deciding to put their homes on the market, which could curb the rate at which prices are rising.

Halifax's figures contrast with those from Nationwide, the rival mortgage lender, which saw only a 0.4 per cent rise in house prices last month, but Nationwide has reported rising prices for the past seven months.

Howard Archer, chief European and UK economist for IHS Global Insight, said: "It just shows you can't put too much store on one survey from one month but have to look at the whole picture. Personally I'm sceptical that house prices can go on rising for much longer. That's not to say that they will fall off a cliff I just don't think the economy is strong enough to sustain these increases."

The recent RICS monthly survey for September showed that house sales had risen but that there had been virtually no change in the stock of properties available for sale. However, new instructions to sell increased for the fourth successive month, suggesting that more homeowners are being encouraged to try to sell in light of the improvement in market conditions.

The Halifax figures chime with construction figures from CIPS today, which showed that the sector's work building new houses had increased for the fourth successive month. However, work on civil engineering and commercial projects had shrunk again and activity in the sector overall was down for the 20th month in succession.

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