House prices are predicted to drift sideways or modestly lower over the next 12 months.

UK house prices rose for a third month in November, according to Nationwide Building Society, which said growth in property values will “remain soft” and may slip again over the coming year. 

The average cost of a home rose 0.4 percent from October to 165,798 pounds up 1.6 per cent on a year earlier.

 “House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook,” Nationwide Chief Economist Robert Gardner said in the report. “But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next 12 months.”

The housing market has struggled to gain momentum as inflation and government spending cuts weaken consumer confidence and as Europe's debt crisis pushes up bank funding costs. A report from Lloyds Banking Group Plc's Halifax mortgage lending unit on Nov. 7 showed its gauge of UK home prices increased in October for the first time in three months, continuing what it said is a “highly mixed” picture of the property market. Hometrack Ltd for example, said that prices based on its measure declined for a seventh month in November.

As the euro-area crisis threatens the UK recovery, the Bank of England expanded its bond-purchase program by 75 billion pounds to 275 billion pounds on Oct. 6. The bank also kept its key interest rate at a record low of 0.5 per cent.

Bank of England data shows that UK mortgage approvals rose more than economists forecast in October. Lenders granted 52,743 loans to buy homes, compared with a revised 51,193 the previous month. Still, that's about half the average of 103,000 in the decade to 2007, before the financial crisis.