House prices have reached a new all-time high after climbing 11 per cent to £186,512 on average, according to the latest monthly survey from building society Nationwide.
The new figures mean average prices have surpassed a previous record set in October 2007, before the start of the financial crisis, when house prices reached £186,044 across the UK.
On a month-on-month basis, prices have now been edging upwards for the last 13 months in a row, but the latest monthly increase of 0.7 per cent recorded in May is weaker than a 1.2 per cent monthly increase seen in April.
Nationwide's chief economist Robert Gardner pointed to "tentative signs" that activity in the housing market "may be starting to moderate" but warned that it is "too early" to say whether this is indicative of "cooling trend" in the wider market.
"The slowdown may partly be the result of the introduction of Mortgage Market Review measures, which may take a few months to bed down, " he added. "However, with mortgage rates close to all-time lows and labour market conditions continuing to improve, underlying demand for homes is likely to remain strong."
The new figures come after the European Commission suggested adjustments to Chancellor George Osborne’s Help to Buy 2 scheme, under which the Treasury advances up to 15 per cent of a property’s price, in an effort to “mitigate risks related to high mortgage indebtedness”.
The Commission warned of housebuyers – particularly in the South-East of England – taking on debt they could not afford once interest rates start rising and called on the Government to take the heat out of the property market by scaling back its mortgage scheme.
More than 27,000 homes have been bought under the Help to Buy schemes since they were launched last year, according to official figures.
"Data suggests that the Help to Buy scheme is providing support to first time buyers, who accounted for over 80 per cent of Help to Buy loans to date," added Mr Gardner. "However, the modest numbers involved so far suggest that Help to Buy is unlikely to be the main factor behind the recent pickup in the wider housing market."
The Nationwide index is based on mortgages approved by Nationwide during the last month. The figures also show that first time buyers accounted for 48 per cent of house purchase activity in March, making it a record high.