British house prices showed their strongest monthly rise in more than two-and-a-half years this month, mortgage lender Nationwide said on Friday, in contrast to a generally weak picture for the country's property market and broader economy.

Nationwide said house prices rose by 1.3 percent in August after falling a downwardly revised 0.8 percent in July. That left prices 0.7 percent lower than a year earlier - a smaller drop than the 2.2 percent decline forecast in a Reuters poll.

Bank of England data on Thursday had shown a bigger-than-expected rise in net mortgage lending in July, but the number of mortgage approvals stayed weak and Nationwide cautioned against reading too much into August's data.

"Monthly price changes have been impacted by a number of one-off factors this year," said Nationwide's chief economist Robert Gardner. "Nevertheless, the fact that the annual pace of house price decline moderated ... provides evidence that conditions remain fairly stable."

Growth in employment in recent months, despite a mild recession which started late last year, was a major factor behind the limited decline in house prices, Gardner added.

Other economic news on Friday was less cheery, with the British Chambers of Commerce sharply downgrading its economic forecasts for this year and next, and GfK NOP reporting continued weakness in consumer confidence.

(Reporting by David Milliken)