UK house prices jump by 3.9% in May - HalifaxThursday 05 June 2014 09.14
British house prices have recorded their strongest monthly increase since 2002, with a 3.9% jump taking average values to £184,464, new figures from lender Halifax show.
On an annual basis, UK prices rose by 8.7% in May, accelerating on an 8.5% rise seen the previous month.
The month-on-month jump is the highest since a 4.2% increase was recorded in October 2002.
Halifax said that demand for housing is still strong and continues to be supported by a strengthening economic recovery.
"Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak. However, there are signs of a revival in housebuilding which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term," the lender added.
Halifax cautioned that monthly movements in house prices can be "volatile". On a month-on-month basis, house prices had fallen in both March and April, before the strong increase seen in May.
It said that figures showing the quarterly change in property values can be a more reliable indicator of underlying trends in the market.
The quarterly measure showed that house prices in the three months to May were 2% higher than in the three months to February.
Halifax's report continues a trend of strong house price figures. Building society Nationwide earlier this week reported that house prices had reached a new all-time high in cash terms on its measure, standing at £186,512 on average after leaping by 11.1% in 12 months.
Speculation has been mounting that the Bank of England could recommend some measures to calm the housing market, which could possibly include diluting the UK government's Help to Buy mortgage support scheme.
There have already been signs that banks are deciding to put stronger curbs on high-value mortgage lending, which have been targeted at taking some of the steam out of the London market in particular.
Both Royal Bank of Scotland (RBS) and Lloyds Banking Group have announced that people applying to take out a mortgage worth more than £500,000 will see the amount they are allowed to borrow limited to four times their income.
Brokers have viewed these moves as sending out a signal that property values will not be able to push up strongly indefinitely, which could make buyers act more cautiously when faced with higher prices.
Toughened industry-wide mortgage lending rules came into force at the end of April which mean people applying for a home loan face more detailed questions about their personal spending. Mortgage lenders also have to apply "stress" tests to make sure customers could still afford their repayments when interest rates rise.
Halifax highlighted HM Revenue and Customs figures showing there were 103,690 home sales in April, which is one third higher than in April 2013.