Average house prices rose by 0.5% in May, taking the annual rate of increase to 3.5%, according to the latest figures from Nationwide building society. The lender, which increased its share of the mortgage market from 12.3% to 16.2% in the past year, says the average UK home is now worth £273,427.

Homes in rural areas have risen by 23% in the past five years, compared to an average of 18% for other areas, according to Nationwide, with rural semi-detached properties seeing the biggest price rises.

Nationwide chief economist Robert Gardner said: “Mortgage approvals data suggests that market activity appears to be holding up well following the end of the stamp duty holiday. Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive.

“Unemployment remains low, earnings are rising at a healthy pace, even after accounting for inflation, household balance sheets are strong and borrowing costs are likely to moderate a little if the Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect.”

He added: “In our latest housing market survey, we focused on homeowners who have moved in the last five years. Our findings indicate that the majority (63%) of house moves were within the same type of area, with the biggest flow being within large towns or cities. Around 9% of moves were from towns/cities to rural areas (villages or hamlets), although this was partially offset by 7% who moved from rural to more urban areas.