A new report has found that demand remains strong within the UK housing market.

The findings, published by Halifax, added that house price inflation also continues to increase.

In May, the mortgage lender said prices increased by 8.7% from a year earlier, and is also a slight rise on last month's rate of 8.5%.

The monthly rise was reported to be 3.9%, which is large, but in the report Halifax said the monthly figures can be "volatile". It added that quarter-on-quarter figures were more reliable, and had increased by 2%.

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Elsewhere, the average property price in the UK now stands at £184,464, which is the highest figure since October 2007.

In a statement, Stephen Noakes, Mortgages Director, said: "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.

"However, 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."

(JP/IT)