UK house prices are now 5.8% higher than this time a year ago, according to Nationwide, but are still 7% off their 2007 peak.
In its latest view of the housing market, the lender said prices increased by 1% in October, taking the average price of a home in the UK to £173,678,
An improving economic outlook and the success of government schemes to boost lending were cited as reasons for the rise.
Nationwide, which bases its figures on the number of mortgages it agrees with customers, said the annual rate of price inflation of 5.8% was at its highest level in more than three years.
Chief economist Robert Gardner said: "The UK housing market appears to be following the more resilient upward trend evident in the wider economy in recent quarters.
"The ability and willingness of potential buyers to transact has been steadily increasing."
Gardner added consumers' ability to buy has been supported by policy measures such as the Help to Buy and Funding for Lending schemes, which have improved the availability and lowered the cost of credit.
"Mortgage rates are close to all time lows," he added. "The willingness of potential buyers to step into the market has also been increasing."
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Short-term noise or something sinister?