HOUSE prices continued to grow this month, according to figures released today by Swindon-based building society Nationwide.

The rate of house price growth was up by 0.6 per cent during August, but the annual rate continues to moderate.

While prices increased during the month, the annual rate went down to 9.6 per cent - down from 9.9 per cent in July.

A typical UK property cost an average of £183,898 in August, £16,177 more than one year ago.

Fionnuala Earley, Nationwide's chief economist, said: "The US sub-prime crisis has created turmoil in international financial markets, but this is unlikely to have a significant additional effect on the rate of growth of house prices in the UK in the short term.

"We still expect house price growth in 2007 to come in close to the middle of our forecast range of between five per cent and eight per cent.

"The expected slowing results from three main factors, each of which have been around for some time.

"First, weaker affordability, as house prices continue to grow more quickly than earnings; second, the effect of higher interest rates and inflation on consumers' pockets; and third, lower house price expectations.

"While it has taken some time for these factors to bite, there are now clearer signs of slower demand in the market reflected in the collapse in new buyer enquiries.

"In addition, the stock-to-sales ratio, which leads house price inflation by five to seven months, predicts a continued slowing in the annual rate of house price inflation."