UK house prices surged a record 4.2 per cent in May from April, the Halifax has said, fuelling fears the property market is overheating and putting pressure on the Bank of England to raise interest rates.
House prices now stand 18.5 per cent higher than a year ago, bringing the average house price - standardised and seasonally adjusted - to £107,152, the Halifax said.
The figures echo data released by the Nationwide Building Society on Thursday, which said average house prices had shot up 17.9 per cent in the year to May - their fastest annual rate since the peak of the last property boom in the late 1980s.
"House prices rose at their fastest ever monthly rate in May," Halifax's group economist, Mr Martin Ellis, said in a statement.
"A combination of very low interest rates and unemployment levels have boosted housing demand which, together with a shortage of suitable properties for sale, has driven prices up sharply."
The strength of the housing market was further reflected in Bank of England data on Thursday showing a £5.7 billion leap in lending secured on dwellings in April, the highest since the series began in April 1993.
The Bank of England has become increasingly concerned that house prices are rising at an unsustainable rate and that people are taking on too much debt.
In the early 1990s, the last time property prices rose at this pace, the boom quickly turned to bust as first time buyers were priced out of the market and a steep interest rate spike meant many people could not keep up with home loan payments.