UK House Prices are due to stay flat or decline over the coming year, despite an encouraging, gradual climb in the UK economy.

A report by building society Nationwide has shown that prices fell by 1.4% in the year to the end of September.

A 0.4% drop compared to August left the average UK home valued at £163,964, according to the UK lender.

Nationwide has also suggested the Bank of England's new Funding for Lending scheme, aimed at boosting credit, could support the market.

The scheme aims to ensure more mortgages are lent to people with only small deposits to put down.

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It is offering to make cheap funds worth about £80bn available to banks and other lenders, on condition they lend the money to commercial and personal borrowers.

Overall, Nationwide did admit that greater business activity and the London 2012 Olympics have reignited the UK economy somewhat, but its chief economist Robert Gardner said warned there are "grounds for caution" about jobs, which were a key factor affecting movements in property prices.

Nationwide's figures also show, interestingly, the geographical idiosyncrasies in UK house price changes in the third quarter of the year.

On average, prices were down 0.5% compared with the previous quarter and 1.6% down compared with the same three months a year earlier, according to the statistics released by Nationwide.

But an examination of the UK’s regions individually showed quite a discrepancy.

Prices declined by 0.3% in England, decreased 4% in Scotland, 4.7% in Wales and were 9.3% lower in Northern Ireland.

(IT/GK)