House prices have recorded their strongest year-on-year growth in nearly three years, as market activity increases, according to the Halifax.
In the bank's latest House Price Index it said the average cost of a home was 2.6pc higher in the three months to May than in the same period a year earlier, marking the biggest increase since September 2010.
House prices increased 0.4pc in May, the fourth consecutive monthly rise, to reach £166,898 on average.
"House prices continue to pick up gradually," said housing economist Martin Ellis.
"Market activity has also improved slightly in recent months although home sales remain low by historical standards."
However, Mr Ellis warned that, despite recent signs of a pick-up 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 rise in house prices is in line with figures published last week by Nationwide, which reported that house prices were now 1.1pc higher than they were a year ago, marking the fastest annual increase seen since November 2011.
The number of mortgages on the market has increased sharply since the Government launched a scheme called Funding for Lending last August, which has given lenders access to cheap finance to help borrowers.
Lenders have been slashing their rates and they have also reported increased numbers of first-time buyers entering the market.
Government schemes called NewBuy and Help to Buy have also been introduced to specifically give people with smaller deposits a helping hand.
Figures out yesterday from the trade body Home Builders Federation, showed that the Chancellor's Help to Buy scheme had beaten expectations with 4,000 new homes sold in the two months since it was introduced in the 2013 Budget.
Under the scheme the government lends buyers up to 20 per cent of the value of a new-build home priced below £600,000, interest-free for five years.
But critics of the scheme, including the IMF and Bank of England governor Sir Mervyn King, have warned it will push up prices rather than encourage housebuilders to build.