The annual rate of UK house price inflation was at its highest in 13 months at 8% in April according to lender Halifax, taking the average price of a home to GBP178,992.
House prices rose in April by 2% from last year, and the bank predicted further increases over the next few months. However, house price growth should start to moderate next year.
The bank said it expects rising council tax and utility bills to curb demand for housing as homeowners struggle to keep up with the increased cost. Council tax and utility bills are set to overtake mortgage interest payments as the largest cost for homeowners this year.
The bank also said that housing market activity has been steadily rising in the last few months. Halifax Estate Agents registered the sixth successive rise in sales agreed on an annual basis in March, with sales agreed in the first three months of 2006 15% than in the year ago period.