A survey by Halifax has found that in the three months to the end of June, house prices were 3.7% higher than in the same quarter last year - the fastest rate of increase since August 2010.
The survey says that the average house price in the UK is now £167,794, and comes after Nationwide reported a 1.9% national increase last week.
Martin Ellis, chief economist at Halifax, said:
“Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices."
Halifax suggested that the government’s Funding for Lending Scheme (FLS) seems to be boosting the market by reducing mortgage rates. The FLS means that banks can borrow money cheaply from the Bank of England, on the condition that they lend it to individuals and businesses.
Help to Buy, another government scheme launched in April 2013, may also be partly responsible for this sudden growth, according to Halifax. Help to Buy allows borrowers to take an equity loan from the government, worth 20% of the price of a new house.
Further evidence of an upturn in the housing market can be seen from some house building companies. The building firm Redrow said the number of homes they built in the past year had risen by 15%, and full-year profits, which they are due to announce in September, are likely to be ahead of expectations.
Pete Redfearn, the chief executive of Taylor Wimpey, another construction firm, said
"We have seen increased consumer confidence, underpinned by generally improved access to, and affordability of, mortgage finance, and by the recent government measures".
However, some are warning that this sudden rise in prices may only be temporary. Matthew Pointon, property economist at Capital Economics, said he believed the upward pressure on prices "is likely to fade" in the coming months as more homes come onto the market. He continued:
"As mortgage rates have reached record lows, housing demand has, not surprisingly, picked-up. And with the supply response so far rather muted, that has helped house prices to slowly, but steadily, trend-up since the start of the year.
"But recent increases in wholesale interest rates suggest mortgage rates have reached a floor, and with more homes now being put up for sale a continued acceleration in prices is unlikely."
Others have highlighted a regional price gap, suggesting that the property market in the rest of the UK may not be picking up as quickly as in London. Giles Hannah, managing director of London agency VanHan said:
"It becomes increasingly clear that the UK has two distinct markets - London and the rest."