Halifax has confirmed that UK house prices are continuing to pick up in the first half of 2013.
Its latest house price index (HPI) for April shows that house prices went up by 1.1 per cent on the month, the highest monthly increase since November and taking prices to the highest level since 2010.
Martin Ellis, Halifax housing economist, said: “The relatively low level of mortgage payments in relation to income continues to provide support for the market.”
The increase follows rises of 0.5 per cent in February and 0.4 per cent in March, which was revised up.
On a quarterly basis, prices rose by 1.3 per cent, the fifth successive increase and on an annual basis prices are up by two per cent on 12 months ago.
The average price of a three-bedroom semi-detached house has risen by almost £6,000 in the past 12 months, up from £160,249 to £166,094.
Halifax said that “mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings.”
Howard Archer, Chief UK & European Economist at IHS Global Insight said: “The 1.1% rise in house prices in April reported by the Halifax is appreciably higher than expected, but it should not be taken as a sign that house prices are about to strengthen markedly.”
Typical mortgage payments for both first-time buyers and people remortgaging have nearly halved as a proportion of disposable income from their peak of 48 per cent in 2007 quarter 3 to 28 per cent in the first quarter of 2013. This is well below the long-term average of 36 per cent.
Mortgage availability has increased since the introduction of the £80 billion Funding for Lending Scheme (FLS) in August 2012 which provides cheap finance to lenders which has led to more competitive mortgage products for borrowers including first-time buyers.
Prices in the three months to April 2013 were 2.0 per cent higher than in the same period 12 months ago. This is the highest increase on this basis since September 2010.
Jonathan Hopper, managing director of property search consultants Garrington, said: "With strong annual, quarterly and monthly figures, the UK property market is once again heading in the right direction.
"For the country as a whole, the fourth consecutive rise in the annual rate of growth shows the market is once again beginning to fire."
However, the Halifax found that activity levels are still subdued with the number of mortgage approvals for house purchases up by three per cent between February and March after two successive monthly falls.
The latest data from the Halifax is in sharp contrast to the recent figures published by Nationwide which indicates that house prices fell by 0.1 per cent in April, the first drop in its data for seven months.
Halifax confirmed that mortgage approvals are one per cent down in the first quarter of 2013 than they were in the first three months of 2012.
Mr Ellis added: “Market activity, however, remains subdued by historical standards with the number of mortgage approvals for house purchases – a leading indicator of completed house sales – easing slightly in the first quarter of 2013, according to the latest industry-wide figures.
"Weak income growth and continuing below-trend economic growth are likely to remain significant constraints on housing demand during the remainder of 2013."
Mr Archer expects modest growth through the rest of the year.
He said: “We believe that house prices are likely to achieve a modest gain of a few per cent over 2013, helped by moderately improved activity. However, a decisive upward move in house prices seems unlikely given the still difficult and uncertain economic environment.”
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