UK house prices rally for second straight month in September, near-term price outlook improves

House prices in the United Kingdom rallied for the second straight month during September, with the near-term prices expectations outlook having improved.

UK’s monthly house price index increased to +17 in September from +13 in August, moving further away from July's three-year low of +5, data released by the Royal Institution of Chartered Surveyors showed Thursday. The back-to-back rises over the past two months followed five months of declines.

Further, price expectations for the near term also improved - in all of the major territories except London. Prices in London fell again due to uncertainty about what the decision to leave the European Union means for the capital and its huge financial services industry, and the impact of a tax hike in April for landlords buying property.

"Central London remains something of an outlier with contributors telling us this is the one part of the market where there may be further give on prices in the near term. Elsewhere the price trend still seems on the up," said Simon Rubinsohn, Chief Economist, RICS.

RICS has previously said the Bank of England's decision to cut interest rates in August for the first since 2009 probably contributed to a brighter mood in the housing market, Reuters reported.

Meanwhile, an expected pick-up in inflation after a sharp fall in the value of the pound is likely to hurt spending power of many households, and companies have signalled they are set to reduce investment while they wait for more clarity on Britain's future relationship with the EU.