House prices shot up by a seasonally adjusted 1.4 per cent in January, more than in any month since July, 2004, according to Nationwide.
Last month's jump brings the increase over the latest 12 months to only 4.4 per cent, but signals a speedy return to double digits unless the pace eases off again in the coming months.
But the Bank of England confirmed the housing market's revival with a report showing that the number of mortgages for house purchase agreed, but not paid out rose to a 18-month high of 122,000 in December from 116,000 in November.
Mortgage lending rose by £8.8 billion in December, the biggest increase in 2005, the Bank added.
This was not matched, though, by unsecured consumer credit, which rose by £834 million in December, less than in any December since 2000, leaving consumer credit just 9.3 per cent higher over the year, the smallest increase for more than a decade.
Credit card borrowing rose by the smallest amount for more than 11 years.
Nationwide said the price of an average home had now reached £158,478, up from £151,757 in January last year.
"This is a significant increase in price and confirms the strengthening trend we have seen since October," said the building society's economist Fionnuala Earley.
"Three-quarters of the 4.4 per cent increase in house prices over the last year happened in the last four months.
"At least part of the pick-up in the market since October reflects a release of some pent-up demand following the cut in interest rates since August and the increased confidence on the part of buyers and sellers as they became more comfortable that the market was heading for a soft landing."
She doubts, though, that the recent jump will persist, partly because the economy is likely to grow below trend again this year with further rises in unemployment.
Affordability remains stretched, too, and consumers appear to be becoming more reluctant to increase their unsecured debt and the amount of extra borrowing against property has slowed, Ms Earley added.
"The fundamentals of the market remain fairly fragile and will prevent strong price rises in 2006.
"Growing uncertainty over pensions has made saving more important.
"While this could generate renewed demand for housing as a form of pension saving in the longer term, consumers may focus on more traditional forms of saving and debt repayment in the shorter term, especially as the stock market recovers."