British property analysts say the market is showing signs of recovering but that strong price growth is being held back by over-cautious mortgage lending.
House-price growth would still be in double digits if banks and building societies were prepared to advance up to six times people's income, said Mr John Wriglesworth, economist for property website hometrack.
As a general rule, lenders will let couples borrow around 2.5 times their income. Single people can get 3.25 times their salary.
But lenders were failing to take into account that interest rates were at their lowest level for more than 50 years, Mr Wriglesworth said.
He called on lenders to stop looking at affordability in terms of a house-price to earnings ratio, and instead look at what percentage of people's earnings were being taken up by monthly mortgage repayments.
Hometrack claims property price growth has so far remained static during 2003, and it expects prices to end the year just 3 per cent to 4 per cent higher than they started it.
But Mr Wriglesworth said: "House price growth in my view would be back in double figures if lenders relaxed their lending criteria.
"House prices are very high relative to average incomes and last time it was this high it crashed. But in my view the cost of a house is not the concern. It's how much of people's pay each month is taken up by a mortgage."
PA