The FTSE 100 gained 1.75% in early trading on Thursday, recovering most of the ground lost on Wednesday.
After a torrid time following the Brexit vote, housebuilders Persimmon and Taylor Wimpey and property firm Land Securities rose more than 5% after house prices rose 8.4% in the year to June - that was, however, the slowest rise in a year.
The FTSE 250, which is more exposed to the UK economy, gained 2% but remains considerably lower than its pre-referendum peak.
The pound made some modest climbs against the US dollar, but is still near 31-year lows.
Shares in Germany and France followed the UK, with the Dax index rising 1.36% and the Cac 40 up nearly 2%.
On Wednesday, US shares rose slightly. The Dow Jones index grew 0.44%, while the tech-focused Nasdaq rose 0.75%.
