House prices in the UK went up by 1.5 per cent on a quarterly basis in May, according to the latest Halifax house price index (HPI).
They recorded the biggest annual rise since September 2010 with prices in the three months to May 2.6 per cent higher compared to the same period in 2012.
Martin Ellis, housing economist, said: "House prices continue to pick up gradually. Prices in the three months to May 2013 were 1.5% higher than in the preceding three months.
This was slightly higher than the 1.3% increase in the three month on-three month measure in April.”
On a quarterly basis, house prices have risen by between one and two per cent for each of the last five months.
On a monthly basis house prices went up by 0.4 per cent.
Halifax reported a modest rise in the number of home sales with sales up 2.0 per cent in the three months from February to April than in the previous quarter.
Halifax said that the latest HPI supports evidence of an improvement in property market conditions since late 2012. Halifax said the ratio of house sales to the stock of unsold properties has increased since last autumn and that evidence of strengthening demand in relation to supply “helps to explain the modest rise in house prices over recent months”.
Mr Ellis explains: “Market activity has also improved slightly in recent months although home sales remain low by historical standards.”
Howard Archer, Chief UK & European Economist at IHS Global Insight said: “The 0.4% rise in house prices in May reported by the Halifax adds to a recently mounting set of data and surveys showing modestly firming housing market activity and prices.
“As such, the Halifax data are fully consistent with our view that house prices are likely to trend up modestly over the rest of 2013, as activity gradually picks up supported by the Funding for Lending Scheme and Help to Buy initiatives.
“However, while a moderate rise in house prices over the rest of 2013 looks ever more probable, a strong upward move remains unlikely given a still challenging and uncertain economic environment despite recent signs of improvement.
The Halifax verdict tallies with Mr Archer in that they believe economic conditions are still weak and that growth in the housing market and the wider economy is likely to be subdued.
"Despite these recent signs of improvement in the housing market, the subdued economic background and the accompanying weak income growth continue to be a significant constraint on housing demand and activity,” added Mr Ellis.
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