Mortgage lender Nationwide said house prices rose 0.6 percent in October compared with a 0.5 percent increase in September. Economists polled by Reuters had expected 0.5 percent growth this month as well.

House prices rose 3.9 percent year-on-year, up from the 3.8 percent annual increase in September.

"We expect house prices to see solid increases over the coming months amid relatively decent activity and a shortage of properties," said Howard Archer, economist at IHS Global Insight.

A National House Building Council report on Thursday showed registrations for new homes -- which take place before building starts -- edged down in the third quarter compared with a year ago.

Nationwide said house prices had grown at an annual 3 to 4 percent over the past five months, which boded well for a sustainable increase in housing market activity.

"The housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape," said Robert Gardner, an economist at Nationwide.

Economists polled by Reuters expect the Bank of England will raise interest rates from their record-low 0.5 percent in the second quarter of next year. [BOE/INT]

Bank of England data due at 0930 GMT are expected to show further growth in mortgage approvals, which have increased most months this year.

(Reporting by Andy Bruce, editing by Larry King)