U.K. house prices rose for a third month in October as increased demand for homes and a lack of properties for sale pushed up values, Hometrack Ltd. said.

The average cost of a home in England and Wales climbed 0.2 percent from September to 156,400 pounds ($258,000), the London- based property-research company said in an e-mailed statement today. House prices fell 4.2 percent from a year earlier.

“The last six months has seen a continued improvement in housing market sentiment on the back of rising demand and a lack of housing for sale,” said Richard Donnell, director of research at Hometrack. “Prices have firmed and the discount between sales and asking prices is back to the same level it was at the start of the credit crunch over two years ago.”

Buyers are returning to the property market after home values dropped as much as a fifth from their 2007 peak and interest rates fell to a record low. With the economy still in recession, most economists expect Bank of England policy makers to extend their 175 billion-pound bond-buying program.

Nationwide Building Society said last week that home values posted their first annual gain in 19 months in October. Lenders granted 56,215 home loans in September, the most since March 2008, according to the Bank of England.

House prices in London gained 0.4 percent in October, the most of any region surveyed, followed by the southeast and northwest of England where prices rose 0.2 percent, Hometrack said.

The number of new buyers registering with estate agents grew at an average 1.1 percent rate over the past three months, slowing from an average 7.5 percent in the spring and early summer, Hometrack said.

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