According to Nationwide, house prices in Britain rose by +1% in April for the second consecutive month, meaning that prices are now +10.5% higher than a year ago, up from a +9% annual increase in March and the highest since June 2007.

The average house price now stands at £167,802. House prices are still -10% below their October 2007 peak and Nationwide believes that the double-digit rate of house price inflation may not be maintained over the coming months.

Martin Gahbauer, Nationwide’s chief executive, said: “The year-on-year rate in this month’s figures received an additional boost from the fact that April 2009 was one of the weaker months last year.”

David Smith, senior partner for UK property consultancy Carter Jonas, added: “The price rises of the past year have been driven primarily by a shortage of stock rather than strong demand. They are also being supported by low interest rates, which will only remain at the current level for so long and possibly not as long as some think given rising inflation.

Once interest rates rise, the pace of price growth will become more subdued and there may be an adjustment in the second half of the year. Many buyers are currently sitting on their hands, waiting to see how the General Election and a second potential Budget pan out before they commit to transact.”