06/08/2013 05:02 BST | Updated 05/10/2013 06:12 BST

House Prices Increase 'At Fastest Pace Since 2010'

File photo dated 02/10/2012 of a general view of an estate agent's 'Sold' sign outside a property, as house prices increased at their fastest rate in three years in July in further signs of a market revival, Nationwide has reported.

House prices have increased at their fastest pace in almost three years as market activity intensifies, Halifax reported today.

A 4.6% annual rise recorded in July was the strongest uplift seen since August 2010, as greater consumer confidence boosted demand, it said.

Prices lifted by 0.9% month on month to reach £169,624 on average, marking the sixth monthly rise in a row.

Halifax housing economist Martin Ellis said recent signs of improvement in the economy and increases in employment have helped consumer confidence, although activity is still being held back by the squeeze on household budgets.

He said: "House prices are expected to continue to rise gradually through this year, with only modest economic growth and still falling real earnings constraining housing demand and activity."

Halifax's report follows similar findings from building society Nationwide last week that the housing market revival is gathering pace.

Lenders, surveyors, estate agents and property websites have all been reporting a strong pick-up in activity following the launch of a Government scheme called Funding for Lending one year ago, which has prompted a big increase in mortgage availability and mortgage providers to slash their rates.

Other initiatives called NewBuy and Help to Buy have been aimed at giving people with smaller deposits a leg up.

House sales in the first half of 2013 were 6% up on the same period last year, according to HM Revenue and Customs figures.

However, Halifax's figures also show the impact of the recent house price increases in terms of how far borrowers are having to stretch themselves.

House prices now stand at 4.62 times average earnings following some steady increases in recent months. This is still way below a peak of 5.83 times earnings recorded six years ago, having lifted from a trough of 4.34 in 2009.

Concerns have been raised that Help to Buy in particular, which will be fully launched next year and underwrite £130 billion of low-deposit mortgage lending with state guarantees, must not lead to a property "bubble".

A report from property website Rightmove yesterday found that three-fifths (60%) of people currently living in the rental sector still feel "trapped", meaning they would like to buy their own home but do not think they can afford to.

Just under one third (31%) of trapped renters said they had previously owned their own home but had returned to the rental sector in the tough economy.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "This will be a long, slow recovery.

"Much ground has been lost and transactions and lending levels are running at a fraction of what they were at the height of the housing boom.

"Government schemes such as Funding for Lending and Help to Buy are seeing a positive impact though, and we expect this to continue when the mortgage guarantee element of Help to Buy is introduced in January."