The house price boom is not over yet, says Halifax

House prices rose by 1.5% last month and the property market continues to be "strong", according to Britain's biggest mortgage lender.

The Halifax's figures issued yesterday are more robust than many expected and contradict data from other sources suggesting that prices are flat or falling.

The Halifax said the average cost of a home rose by almost £2,000 last month to £129,568, following smaller rises in March and April.

Despite much talk of the housing boom being over, prices have risen by an average of 1.3% a month during the first five months of this year - above the long term historical trend, according to Halifax.

Behind the headline figures there was fresh evidence of a slowdown in the market.

The Halifax said May's strong rise was not enough to prevent the annual rate of price growth falling back slightly, to 22.7% from 23.6% in April. The increases so far this year are substantially less than those at the end of 2002 - prices rose by 2.4% a month on average during the last five months of last year.

This echoes comments last week from rival lender Nationwide, which recorded a 1.3% rise in May and also said the annual rate of growth had slipped back slightly.

Martin Ellis, the chief economist at Halifax, said May's rise was consistent with strengthened consumer confidence since the end of the Iraq war. "The fundamentals underpinning the market remain in place. Good labour market conditions and low interest rates remain supportive of housing demand," he added.

New figures showing mortgage borrowing expanded at its fastest for three months in April underlined the relatively healthy state of the housing market.

The Bank of England said yesterday home owners borrowed an extra £7.58bn against property in April, up from £7.44bn in March, pushing up annual growth to 13.8% - the fastest pace since 1990.