UK house prices increased 0.4% in March compared to the previous month, Halifax said.

Improvements in economic growth and real wages in the UK combined with low borrowing costs have helped to boost demand for property.

However, house price growth has slowed at an annualised rate, the mortgage lender said, as property prices were now 8.1% higher than a year ago. This was down on the 8.3% annual house price increase reported in February.

"The recent return to real earnings growth for the first time in several years, very low mortgage rates and last December's stamp-duty changes are supporting housing demand," Halifax housing economist Martin Ellis said.

Ellis said activity in the UK housing market could slow over the course of the year, as wage growth is overtaken by the rate of price rises.

Halifax estimated annual house price growth in the UK would rise between 3% and 5% by the end of 2015.

In a report on April 7, the mortgage lender found that less young Britons were planning to become home owners than at this time last year.

According to figures from the Office for National Statistics (ONS), the average cost of a home rose by 10.7% in England and 17.4% in London in 2014 which has deterred potential buyers.