LONDON (Reuters) - British house prices rose for the fourth month running and at their fastest monthly rate in two-and-a-half years in August, the Nationwide Building Society said yesterday, in a further sign the housing market is picking up.

The mortgage lender said house prices rose 1.6 percent this month after a 1.4 percent rise in July, taking the annual rate of decline down to 2.7 percent — its smallest since April 2008 — from 6.2 percent.

Analysts had forecast prices would be flat on the month, for a 4.6 percent fall on the year.

House prices have been supported recently by a lack of homes coming onto the market, alongside a tentative pick-up in interest from people wanting to buy. Other surveys have also shown prices picking up from last year's slump.

Markets paid little heed to the figures, however, and analysts were sceptical that any improvement in the housing market would last and support consumer demand, given the ongoing broader weakness in the economy and rising unemployment.