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British house prices rose for the second month running in June, leaving them less than 10 per cent down on a year ago, the Nationwide building society said today, in another sign the market may be stabilising.

The figures followed a survey by GfK/NOP which showed consumer confidence hitting its highest level in 14 months in June as Britons became more optimistic about their finances.

The data added to the view Britain may be one of the first major economies to pull out of recession and helped lift sterling to its highest level of the year on a trade-weighted index.

“An upbeat UK house price report gave sterling a lift this morning,” said Nick Kounis, an economist at Fortis. “This adds to evidence suggesting the housing market is turning.”

The Nationwide building society said house prices rose 0.9 per cent this month, taking the annual rate of decline to 9.3 per cent - the smallest fall since July 2008 - from 11.3 per cent in May.

And prices in the three months to June were 0.9 per cent higher on the previous three months, the first positive reading since December 2007, with the average house price now standing at £156,442.

“House prices have risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise,” said Martin Gahbauer, Nationwide's chief economist.

Nevertheless, policymakers are still being circumspect and not declaring victory yet over Britain's first recession since the early 1990s.