House prices inflation jumped by 2.1% in April compared to March, the latest Nationwide index reveals.
The index shows that the year-on-year rate of property price inflation, accelerated to 18.9%, the fastest rate of growth since June last year.
Nationwide says recent data on mortgage approvals suggests that the pick-up in the market during the early part of this year is likely to be sustained for some months to come.
Significantly, the fundamental drivers of house prices support this assessment. Money remains cheap with mortgages still on offer at around the 4% mark and the employment picture appears to be strengthening. The Labour Force Survey shows the level of employment rising at its fastest pace over the past quarter since the early part of 1997.
The index reveals the house price earnings ratio for the whole country now stands in excess of 5%, which is the highest level on record. Monthly mortgage payments as a share of average earnings remain rather less stretched from a historical perspective. Nationwide estimates these currently account for around 20% of earnings compared with a long run trend of 22%.
Concerns persist over the pressure on first-time buyers but the latest data published by both the ODPM and the Council of Mortgage Lenders suggest that the picture is not quite as bleak as is generally assumed.
Nationwide says base effects will make it hard to push the rate of house price inflation much above 20% over the balance of this year. Each month from May onwards in 2003 generated an increase in prices in excess of 1%.