UK house prices rise in August despite economic headwinds, Nationwide says

LONDON, Sept 1 (Reuters) - British house prices rose in August, according to data from mortgage lender Nationwide Building Society on Tuesday that suggested demand held up despite an uncertain economic outlook and the impact of the war in Iran.

House prices last month were 1.6% higher than a year earlier, speeding up from a 1.4% increase in July, Nationwide said. The rise was below a 2.0% increase forecast in a Reuters poll of economists.

Prices edged up 0.2% in monthly terms in August, slightly above the 0.1% rise forecast in the poll.

"Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop," said Robert Gardner, Nationwide's chief economist.

"Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates."

However, Gardner said affordability was improving.

Separate figures due later on Monday from the Bank of England, which many economists think will keep its main interest rate at 3.75% this month, are expected to show a small increase in the number of mortgages approved by lenders.

Mortgage approvals are a leading indicator for house purchases.

Figures from Rightmove last month showed the biggest August fall since 2018 in asking prices for newly listed homes despite a modest pickup in activity after Prime Minister Andy Burnham took office.

Ashley Webb, senior UK economist at Capital Economics, said uncertainty over possible tax rises in finance minister John Healey's upcoming budget could add to the restraints on house price growth in the coming months.

($1 = 0.7386 pounds)

(Reporting by Suban Abdulla; editing by Sarah Young and Paul Sandle)