House prices increased by 0.8 per cent in August 2006 , bringing the annual rate of house price growth to its highest level since April 2005, new statistics show.

Figures from Nationwide show that house prices are now 6.6 per cent higher than at this time last year, with house price growth three times faster than August 2005.

An average property in the UK now costs £167,721, which is £10,412 higher than in August 2005 and amazingly, the equivalent of a rise of £30 per day.

However, while the rise in interest rates earlier in the month and expectations of further rises may have a dampening effect on the housing market, it is not expected to slow as sharply as it did in between November 2003 and August 2004, when rates were increased five times, said Nationwide's group economist, Fionnuala Earley.

"The rise in rates will undoubtedly have sent a cautionary signal into the market, but inflationary pressures in the economy now are less certain than in the previous cycle," she said.

"This means that rate rises are likely to only be a catalyst to the slowing we had already expected, rather than fostering a repeat of the 2004 slowdown."

However, higher interest rates will worsen housing affordability and make getting on the housing market more difficult for many people, she added.

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