House prices leapt up by 1.6% in April, pushing the annual rate of increase up to 8.5% according to the Halifax.
This follows a 0.6% increase in March and a fall of 0.4% in February. The average house price is now £196,412.
“Housing demand is being supported by a number of factors including economic improvement, rising employment and low mortgage rates,” said Martin Ellis, the Halifax’s housing economist.
He added, however, that supply remains “very tight”, with a shortage of properties for sale.
“This combination has kept house price inflation steady in recent months with prices increasing by 2.2% to 2.6% on a quarterly basis and at an annual rate of 8% to 9%,” he said.
While monthly house price figures can be particularly volatile, the Halifax findings for last month are backed by those of Nationwide building society.
Its recent figures showed that the price of an average UK home rose by 1% in April, the biggest increase since early last summer.
Consumer confidence in the housing market is also looking strong, with more people thinking the next 12 months will be a good time to sell than at any time since the Halifax started tracking consumer sentiment in 2011.
This confidence may well be boosted further by a general election result that looks likely to restore some certainty. Shares in estate agency chain Foxtons shot up by 13% on Friday morning as the news emerged of a Conservative victory.
“We maintain the view that housing market activity has bottomed out and will pick up gradually over the coming months,” said Howard Archer, chief economist at IHS Global Insight.
“We expect support for housing market activity to come from the recent stamp duty reform, very low mortgage rates, elevated consumer confidence, a pick-up in earnings growth and rising employment.”
He added that this will be constrained by a more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the knowledge that interest rates will eventually start rising.
