Guardian News and Media/London

House prices rose by 0.6% in August, driven upwards by an improvement in mortgage availability and a continued lack of homes to buy, according to figures from the UK’s biggest building society.

Nationwide’s latest snapshot of the property market, based on mortgages it approved over the month, put the average price of a home at £170,514 -  more than £8,000 higher than in January but still well below their 2007 peak.

This was the 11th consecutive month the index showed a rise and is likely to increase concerns that government efforts to stimulate the market are fuelling unsustainable growth.

The monthly rate of growth was less than the 0.9% recorded by the index in July, and the annual rate of inflation also fell, from 3.9% to 3.5%.

However, the society noted that the previous month’s year-on-year figure was boosted by a low base for comparison.

The three-month-on-three-month measure, which offers a better indicator of the underlying trend, showed growth of 1.4% - its highest level since mid-2010.

Nationwide’s chief economist, Robert Gardner, said house prices were rising at a “brisk pace” thanks to a number of factors.

“Consumer confidence has increased significantly in recent months thanks to further modest gains in employment and signs that the UK economy is finally gathering momentum,” he said.

“An improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures such as the Funding for Lending and Help to Buy schemes, is also enabling more people to take their first steps into the property market.”

However, Gardner said that while there had been signs that housebuilding was starting to recover, construction was still running well below what was likely to be required to keep up with demand.