UK house prices continued to rise at a "fairly brisk pace" in August, increasing by 0.6% compared with July, the Nationwide said.

The building society said that property prices were up by 3.5% compared with a year earlier, although August 2012 was a slow month.

The average home was valued at £170,514, it said. Greater consumer confidence, owing to more employment and signs of economic recovery, helped push up prices. The building society's chief economist, Robert Gardner, added that greater availability of cheaper mortgages had also increased activity in the market. The three-month on three-month comparison in prices, regarded as a less volatile measure of property prices, recorded a 1.4% rise.

This was the biggest increase since mid-2010, the Nationwide said. Various other surveys have shown an increase in prices in recent months, although the overall rise was driven by activity in the London property market.

Figures from the Land Registry published earlier in the week showed that prices rose by 6.3% in the capital in the year to the end of July. In contrast, prices dropped year-on-year in north-east England, in Yorkshire and the Humber, in north-west England and in Wales.

Yet the Nationwide said that government schemes were helping to reduce the cost of credit and increase the availability of mortgages. This has raised the proportion of first-time buyers in the market. They accounted for 45% of the house purchase loans in the second quarter of the year, the highest quarterly level since 2005.

The Bank of England also recorded that average interest rates on a new home loan fell to 3.17% in July - the lowest rate since comparable records began in 2004, while approvals rose to their highest level since March 2008.