British house prices rose at their fastest annual pace in nearly three years last month, and are likely to increase further in the remainder of 2013, mortgage lender Halifax said yesterday.

Halifax said that house prices in the three months to July were 4.6 per cent higher than a year earlier, beating economists’ forecasts and their fastest pace of growth since August 2010.

Prices rose by 0.9 per cent in July alone, gathering pace from a 0.6 per cent increase in June.

“Signs of improvement in the economy ... appear to have boosted consumer confidence,” said Halifax economist Martin Ellis.

“House prices are expected to continue to rise gradually through this year, with only modest economic growth and still falling real earnings constraining housing demand and activity.”

Last week rival mortgage lender Nationwide also reported the fastest annual rate of house price growth for three years.