House prices higher than a year ago

House prices have risen 4.6 percent this year, according to the Nationwide index, after falling almost 16 percent in 2008. That left the average house price at 162,038 pounds, 13.1 percent below its peak in October 2007.

But October's 0.4 percent rise was well below the average 1.2 percent monthly gain of the last five months.

"A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable," said Nationwide chief economist Martin Gahbauer.

Still, the strength of the housing market appears to have helped bolster consumer's appetite to spend, with department store chain John Lewis -- a retail bellwether -- announcing a sixth consecutive rise in weekly sales on Friday.

And the GfK survey said Britons' propensity to splash out on a major purchase was its highest since November 2007.

John Lewis said sales in the last week were 9.1 percent up compared with a year ago, helped by strong demand for home wares.

But the figures were flattered by weak results a year ago and analysts warned the latest sentiment and house price improvements may not mean higher spending going forward.

Moreover, a temporary cut in value-added tax to 15 percent from 17.5 percent may be boosting demand.

"Even though low mortgage payments, reduced utility bills and easing inflation are boosting the purchasing power of a good many people, the fact is that consumers continue to face serious obstacles that are likely to limit spending for some time to come and, hence, the upside for growth," said Howard Archer, economist at IHS Global Insight.

"These notably include high and rising unemployment, low earnings growth and heightened debt levels."