By Daniel Hunter

The latest Halifax House Price Index shows that house prices are rising at their fastest annual rate for nearly three years.

The Halifax, one of the UK's biggest mortgage lenders, said prices in the three months to the end of June were 3.7% higher than in the same quarter last year.

The survey compares with a 1.9% annual increase reported by Nationwide earlier this week.

"House prices continue to rise steadily. Prices in the three months to June were 2.1% higher than in the previous quarter, edging above the 1-2% range recorded throughout the first five months of the year. The annual rate is at its highest for nearly three years with prices in the three months to June 3.7% higher than in the same three months last year," Martin Ellis, housing economist, said.

"Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase — a leading indicator of sales — increased in May.

"Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices. The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates.

"There are also early indications that the Help to Buy: equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013."

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