At £162,764, the average house price is at a similar level to where it was in early 2006. This suggests that house prices are rising at a more moderate rate than in the spring and summer months.
Martin Gahbauer, Nationwide's Chief Economist, said the labour market has held up better than expected but uncertainties remain.
He said: "With the UK experiencing its longest and deepest recession since WWII, most economists expected unemployment to increase very sharply in 2009, perhaps breaching the psychologically important three million mark by the end of the year. While unemployment has indeed increased noticeably, the rise has not been as rapid and pronounced as previously feared. Based on the latest labour market figures from September, it now looks unlikely that the jobless total will reach three million before the year is up."
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The Nationwide believes mortgage rates have fallen sharply as a result of base rate cuts, this has meant that far fewer borrowers have fallen into arrears than would normally be the case in a recession.
Mr Gahbauer concluded: "In fact, the percentage of borrowers in arrears across the mortgage industry has even edged down slightly in the most recent quarterly figures. As such, the downward pressure on house prices from distressed sales has so far been significantly lower than expected."
(CD/GK)
