House prices lifted by 8.5% year-on-year in April as demand from home buyers “remains strong”, Halifax has reported.
But on a month-on-month basis, values dipped by 0.2%, marking the second monthly fall in a row and taking average prices to £177,648.
Halifax said monthly changes can often be volatile and price movement compared with the previous quarter tends to be more reliable when working out the underlying trend in the market.
On this measure, prices have increased by 2.3% compared with the preceding three months, which is in line with the quarterly trend over the past 11 months.
The annual pace of increase is slightly down on an 8.7% year-on-year rise in March, but Halifax said upward pressure on prices is still coming from demand continuing to grow at a stronger pace than the supply of homes coming up for sale. A mortgage lending clampdown came into force on April 26 and some experts have said this could slow down the market.
Applicants face being asked more detailed questions about their spending habits under the Mortgage Market Review (MMR) rules.
There have also been some signs of mortgage rates edging up in recent weeks. Much of this has been put down to increases in swap rates, which lenders use to price their loans, but some analysts have also suggested lenders might consider putting rates up a bit to stem the tide of mortgage applications while they adjust to the MMR changes.
Stephen Noakes, mortgages director at Halifax, said: “On an annual basis, housing demand still remains strong. Housing demand continues to be supported by an economic recovery that is gathering pace, rising consumer confidence, low interest rates and wage growth finally beginning to outgrow consumer prices.
“However, with supply of properties being slow to respond to market conditions, stronger demand in the past year has resulted in upward pressure on house prices.”
Speculation has been mounting in recent days that the Bank of England could step in to cool the housing market, amid fears that prices are rising too rapidly.
Halifax pointed to findings from the Royal Institution of Chartered Surveyors (Rics) showing that the supply of homes coming on the market is still failing to keep pace with demand.
But it also highlighted HM Revenue and Customs (HMRC) house sales figures showing that transactions have dropped off recently and Bank of England figures which have shown a recent dip in mortgage approvals.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “It is notable that housing market data have become more mixed recently after showing clear, sustained improvement for the best part of a year.
“The recent more variable news on the housing market may ease some concern that a housing market bubble is developing and the recently-introduced stronger rules on mortgage lending may well have a significant containing impact - but it is still a significant danger that policymakers must monitor closely and react to if necessary.”
Nicholas Ayre, managing director of buying agency Home Fusion, said the monthly dip in the figures could be a sign that buyers are starting to become a bit more resistant to the prices that sellers are asking.
Mr Ayre said: “However, this may just be a blip rather than the beginning of a downwards trend in prices. Prices still rose on the quarter and on the year.”