Adding to the evidence of a resurgent property market, Nationwide today lifted its forecast for gains in 2006 to 5 per cent, compared with a December forecast of between 0 per cent and 3 per cent.

The lender said a robust economy, stable labour market and limited supply continue to support house prices.

The Land Registry's quarterly official figures, based on the prices paid for homes changing hands, provide the most comprehensive gauge of property market conditions and confirmed the continuing recovery shown by a wide range of surveys.

The resurgence in market activity in the first quarter, when the number of houses sold was up by 40 per cent from a year earlier, persisted over the April-to-June period, with transaction levels up by nearly 27 per cent on the same time last year. Robust activity helped to drive further strong price gains across the country.

In England and Wales, house prices in the second quarter were up by an average of 7.7 per cent on a year earlier. This was an increase from the 5 per cent annual rate in the first quarter.

Greater London prices rose by an annual 8.3 per cent in the second quarter, against the 6.29 per cent year-on-year increase in the previous three months. The registry said that the average price of a London home climbed to £317,679 — more than a third higher than the national average of £199,184.

The fastest annual gains in the second quarter were in the North, with prices up 11.1 per cent year-on-year, on the heels of an 8 per cent figure for the first quarter. The North West registered gains of 11 per cent, while Yorkshire and Humberside rose 10.1 per cent.

The smallest annual rate of increase in the quarter was in East Anglia, where prices rose 4 per cent from a year earlier, although this was still up from the first quarter figure of 1.7 per cent.

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