House prices soared by two per cent during July, suggesting the market is holding up despite higher interest rates, Government figures showed yesterday.
The jump in prices pushed annual house price inflation up to 12.4 per cent for the year to the end of July, its highest level since March 2005.
It is the third month in a row that the annual rate of growth has increased, leaving the average home in the UK worth £218,479.
The figures from the Department of Communities and Local Government go against growing evidence from other house price indexes that the property market has peaked following six interest rate rises during the past year.
Last week Britain's biggest mortgage lender Halifax said property prices rose by only 0.4 per cent during August, while Nationwide Building Society said they increased by 0.6 per cent.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The latest data from the DCLG suggests that the housing market is continuing to power ahead.
"These figures, however, relate to July and do not begin to reflect the more recent turmoil in financial markets. Even without a material round of job losses in the financial services industry, which is an increasing risk, we would expect house price inflation to slow sharply over the coming months as access to mortgage finance is disrupted, particularly for higher risk borrowers."
The DCLG figures showed that all types of property experienced strong gains during the month, with detached homes leading the way with a jump of 2.4 per cent, while the price of bungalows rose by an average of 2.1 per cent, terrace house prices increased by two per cent and the cost of flats and semi-detached homes rose by 1.7 per cent.
Across the regions, Northern Ireland continued to see the strongest annual house price gains, with the cost of homes there soaring by 46.8 per cent in the year to the end of July, although the rate had slowed slightly from 55.9 per cent the previous month.
Elsewhere, London and the South continued to lead the way, with annual house price inflation in the capital jumping to 19.1 per cent, up from 17.5 per cent in June, while it rose to 11.9 per cent in the South-east and 11.3 per cent in the South-west.
But although the annual rate of growth rose slightly to 8.5 per cent in the North-east, in other northern regions it slowed, with the North-west seeing a drop to 7.6 per cent and in Yorkshire and Humberside it eased to 8.4 per cent.
The gains in the North-east pushed the average cost of a home past the £150,000 barrier for the first time to average £151,064, meaning there is now no region in the UK where the average property costs less than £150,000.
Buyers getting on to the property ladder across the whole of the UK are now paying an average of £167,314 for their first home, 13.2 per cent more than they paid last year.
Meanwhile, retired homeowners have also seen the value of their properties rise - by £151 million a day during the past year.
Rising house prices meant homeowners aged over 65 in England and Wales saw their equity increase by £64.4 billion between May 2006 and June this year, to stand at £713.7 billion, according to Prudential.
Retired people in London who own their home outright saw the biggest gains, while even in the North-east, where gains in the value of property were lowest, pensioners saw the value of their homes rise by £1.3 billion, to leave them sitting on housing equity worth £21 billion.