A record low number of houses for sale has helped the average house price in Britain jump to £204,674 within the three months to August - a 9 per cent increase on the same period last year and a 3 per cent increase on the preceding three months.

The spike has been caused by a shortage of second-hand properties (properties that are not new builds) on the market combined with the economic recovery and low mortgage rates, Halifax said.

It cited a report from the Royal Institution of Chartered Surveyors which stated the stock of homes available for sale fell again in July due to another record low.

The underlying pace of house price growth is strong - Martin Ellis, Halifax

Despite the hike, the average monthly cost of buying a three bedroom house in the UK for a first-time buyer still remains £56 lower than the typical monthly rent.

Halifax housing economist Martin Ellis said:

"The underlying pace of house price growth is strong.

"The shortage of second-hand properties for sale on the market is resulting in upward pressure on house prices. At the same time, economic recovery, real earnings growth and very low mortgage rates are supporting housing demand.

"Strengthening demand and highly constrained supply are likely to mean that house price growth continues to be robust in the short-term."

Mortgage approvals

Halifax pointed to recent figures from the Bank of England that show mortgage approvals for house purchases have increased by 3 per cent in July- the highest level since February last year.

Approvals in the three months leading up to July were 5 per cent higher than in the preceding three months and 4 per cent higher than in the same time last year.

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