The average price of a house in the UK hit £184,464 in May, up from £166,767 a year earlier, the lender said.
Compared to April this year, house prices grew 3.9% in May, following two months of declines.
Lloyds Banking Group director of mortgages Stephen Noakes says:
“On an annual basis housing demand is still strong and continues to be supported by a strengthening economic recovery. Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak.”
“There are signs of a revival in housebuilding which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term.”
Stephen Smith, Director Mortgage Club and Housing at Legal & General, comments:
"Today’s figures highlight the continuing trend of rising house prices across the UK. This trend is particularly clear when looking at the year-on-year increase. However it is important to consider the regional picture when looking at house prices. Areas such as London and the South East are seeing rapid increases in property value, which are driving a large part of the house price growth in the wider market. Despite this, other areas are not experiencing this degree of growth, highlighting the existence of a two speed housing market in the UK.
"With demand for housing unlikely to subside in the near future, more houses need to be built to re-establish a balanced market. This is important to help ensure a sustainable recovery. A minimum of 250,000 homes need to be built every year to meet this demand, but we are currently only constructing around half that figure. If not tackled, the issue of housing supply has the ability to significantly stifle wider economy, so it is encouraging to see that it is now firmly on the political agenda."
