By Daniel Hunter

House prices jumped by 1.6% month as the supply of homes for buyers to choose from remains tight, according to the latest survey from the Halifax. The annual rate of increase has risen to 8.5%.

The average house price has now risen to £196,412.

Demand for housing was being supported by several factors, said Halifax, including the improving economy, rising employment and low mortgage rates.

The lender expects the annual rate of increase to have slowed by the end of the year, noting that house price rises were continuing to outstrip increases in average earnings.