Housing market gains momentum

House prices recorded their strongest annual increase for more than two years in May in further signs that the market is gathering momentum.

Halifax reported yesterday that prices rose by 2.6 per cent year-on-year to £166,898 on average, marking the biggest annual uplift since September 2010.

Month-on-month, prices increased by 0.4 per cent, less than the previous month but the fourth in a series of increases.

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Lenders, estate agents, surveyors and property websites have been reporting signs of confidence returning to the market in recent months, following the launch of several Government schemes to make it easier for people to get mortgages.

The number of mortgages on the market has sharply increased since the Government introduced its Funding for Lending scheme last August, which gives lenders access to cheap finance to help borrowers. Lenders have also been offering some of their lowest ever mortgage rates.

The Government also recently unveiled its Help to Buy scheme, specifically to assist people with small deposits. This will come into full effect next year. However, concerns have been raised that the scheme could lead to a “housing bubble” by artificially propping up prices.

Halifax said that HM Revenue and Customs figures showed there has been a “modest” pick-up in home sales recently, although sales volumes still remain low by historical standards.