UK house prices increased by 4.3% in the three months to July 2015, the highest quarterly growth for eleven years, according to housing analyst Hometrack.
The firm's latest UK Cities House Price Index reports that house price inflation in 20 of the UK's cities reached 8.5% in July, compared to 7.2% in April.
The consultancy also says that transaction volumes have increased by 32% since April and mortgage lending for home purchases has risen by 26% during the same period.
Of the 20 cities researched by Hometrack, Cambridge recorded the highest annual growth of 10.9%, followed by Oxford, London and Bristol.
The lowest figure was recorded in Aberdeen at -0.7%.
The highest quarterly growth was also recorded in Cambridge (7.3%), while Aberdeen again posted the lowest growth figure at -1.4%.
Nine of the twenty cities still have average prices that are lower than 2007 levels, although Hometrack says this gap is narrowing rapidly.
For example, prices in Liverpool and Glasgow remain below their 2007 peak, by 13% and 11% respectively.
“There remains further upside for city level house prices over the remainder of 2015. Low mortgage rates, economic growth and rising earnings will continue to stimulate demand and put an upward pressure on prices,” says Richard Donnell, director of research at Hometrack.
Commenting on the capital, he adds: “As an international city, London is out on its own setting new highs for prices and affordability. How long this can be sustained is down to the prospects for the different segments of demand, specifically international buyers, domestic investors and domestic home owners. Overall city level house price inflation remains on track for 10% growth in 2015.”
Yesterday the Council of Mortgage Lenders (CML) reported that there was approximately £22 billion of gross mortgage lending in July, the highest monthly total since July 2008.
CML's July figure represents a 9% increase on June's total and a 14% rise when compared to July 2014.
“There is no mistaking that the mortgage market appears to be in rude health this summer having posted the highest monthly lending total of the post-recession era. Lenders have clearly regained their appetite for business after repeatedly tightening loan criteria over the last 18 months,” says Peter Williams, executive director of the Intermediary Mortgage Lenders Association.
Also this week, the Office for National Statistics reported that house prices in the UK increased by 5.7% in the year to June 2015, marginally up from 5.6% in the year to May.