House prices rise at fastest rate since 2010
However there were some signs that the pace of increase was slowing with house prices in August increasing by 0.4% compared to the 0.9% increase reported in July.
Martin Ellis, housing economist at the Halifax, said: “Relatively modest economic growth and below inflation rises in earnings are likely to act as a brake on the market.
“Overall, house prices are expected to rise gradually over the remainder of the year.”
The average price of a house in the UK now stands at £170,231, the highest level since September 2008.
Ben Thompson, managing director of the Legal & General Mortgage Club, said: “Today’s figures clearly confirm that the market is continuing to gather pace and that the recovery is well and truly on track.
“At the moment that pace is sustainable especially when you consider the downturn we have had since 2007.
“However, the picture remains regional and patchy across the UK showing there is still work to be done in some areas.”
But Thompson said he was concerned that the market could overheat if prices rise too quickly making the prospect of home ownership or moving into more suitable housing disappear into the distance for many people.
He added: “Gentle house price growth over a number of years that is close to the level of inflation or even a little below it would be preferable as that would slowly bring a more sustainable balance to the housing market.
“Above all the best solution to housing affordability would be the widespread construction of suitable homes to increase supply and meet the undoubted demand.”