House prices have grown fastest in years, says Halifax

2.6% year-on-year growth to average £166,898 marks biggest annual uplift since September 2010

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 today.

Prices rose by 2.6 per cent year-on-year to £166,898 on average, marking the biggest annual uplift since September 2010.

On a month-on-month basis, prices increased by 0.4 per cent, which was smaller than the previous month but the fourth month in a row of rises.

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 a mortgage.

The number of mortgages on the market has sharply increased since the Government launched 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 flagship Help to Buy scheme, which is specifically aimed at giving people with low deposits a helping hand and will be fully fired into action 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.

Martin Ellis, housing economist at Halifax, said: "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."

The latest figures were released as the Home Builders Federation (HBF) reported today that the Help to Buy scheme has already got off to a "flying start" in its initial stages.

Around 4,000 people have reserved a new home in the two months since the scheme was launched and the HBF said interest in the initiative has been "huge".

The first part of the Help to Buy initiative, which is already under way, involves the Government helping buyers of new-build homes to get a mortgage with a deposit as low as 5 per cent by granting an equity loan of up to 20 per cent of the property's value.

The equity loan can be repaid at any time or when the home is sold on and this part of Help to Buy is expected to deliver 74,000 sales over its three-year life.

The second part of Help to Buy, which starts next January, is aimed at stimulating the whole housing market.

It will involve the Government making guarantees to lenders which will be able to support £130 billion-worth of low-deposit mortgages.

The guarantee scheme, which will also run for three years, is expected to generate around 190,000 sales per year - the equivalent of one fifth of housing transactions made in the UK last year.

Howard Archer, chief European and UK economist for IHS Global Insight, said that while home-owners' mortgage interest payments have edged downwards, house prices are still less affordable by long-term standards when compared with earnings.

Halifax's latest report showed that house prices cost just over four-and-a-half times the typical full-time male wage - higher than the longer-term average, which is closer to four times the average income.

PA

Discover more property articles at Homes and Property
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
PROMOTED VIDEO
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
tech
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Recruitment Genius: Business Development Executive - Nationwide - OTE £65,000

£30000 - £65000 per annum: Recruitment Genius: This small technology business ...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum