A shortage of supply of homes helped property climb 1.6% in April when compared with March, according to the latest survey from the Halifax.
The Halifax house price index shows the annual rate of property price growth is slightly up at 8.5%, with the average value of a UK home now at a record high of £196,412 – up £3,084 compared with March when house prices grew 0.6%
However, the report adds that house prices in the three months to May are just 2.2% higher than in the three months to January – the slowest rise since the turn of the year.
The latest index says demand for homes was supported by the improving economy, rising employment and low mortgage rates.
But Halifax housing economist Martin Ellis warns: “The resulting rise in the level of house prices in relation to earnings should constrain house price growth and activity over the remainder of the year.”
“The annual rate of house price growth is forecast to end the year at between 3% and 5%,” he adds.
The Halifax data is the first to be released since the mortgage lander offloaded its house price Index to financial information provider Markit.
At the time of the sale in March, a spokeswoman for Lloyds Banking Group-owned Halifax said the index – which uses data covering the whole country going back to January 1983 – was launched as a tool for the media, but over the years has developed into a major financial benchmark that is widely used by external companies and organisations.
“The original purpose of the house price index and what it is today are two very different things,” she said. “It is not a core part of our business, and it makes sense for someone like Markit to administer it.”
Markit calculates more than 14,000 indices around the world. As part of the deal, the company has bought the index and all associated intellectual property.