But the increase comes after a 0.4% decline recorded in September and prices are still 0.9% lower than one year ago.
Nationwide’s chief economist Robert Gardner said monthly price changes have failed to establish a strong trend in either direction over the past six months.
And he added the housing market will continue to be faced with challenging conditions as economic conditions remain fragile.
He said: “Whilst the recent 1% growth is clearly good news it is important to recognise that a number of one-off factors such as the Olympics provided a significant boost to activity in quarter three.
Donna Houguez, market analyst at Quickmovenow.com, said: "Three months up then three months down says it all. The property market has zero direction and is being skewed by low transaction levels.
"The fact that prices are down over the year paints a far more accurate picture of the market and there is every chance they will continue to fall in 2013.
"Despite the fact that we have technically exited recession the UK economy, as the Nationwide observes, remains under pressure and this will mean the property market has to fight for any gains.”
Ashley Alexander, director of estate agent review website MeetMyAgent.co.uk, said the recent house price trends makes it difficult to predict what could happen over the next 12 months.
He said: “It's hard to glean anything from the pattern of monthly movements because they are so up and down.
"Although prices have fallen the overall change is small and 2012 will be viewed as a welcome stabilising of the housing market after a turbulent few years.”
However Mark Harris, chief executive of mortgage broker SPF Private Clients, was more optimistic about the outlook for the housing market.
He said: “Increased loan availability, better rates as a result of Funding for Lending and increased confidence among buyers as we emerge from the double-dip recession all have a part to play in contributing to a slightly more positive picture for the housing and mortgage markets.”
Meanwhile London prices continue to remain buoyant.
Independent buying agent Gabby Adler said: “London continues to lead the rest of the country. In parts of the capital there is heightened competition with a rise in the use of sealed bids for good properties.
“In such a scenario the property will often achieve more than the asking price. Vendors are pricing more realistically on the whole and there are more price reductions than we've seen in recent months. Properties are either selling fast for a premium or sticking around.”
