UK house prices
Many households are planning to buy a new home over the coming year, a surge in demand that will keep house prices rising Reuters

A total of 1.72 million households in the UK plan to buy a new home within a year, according to a poll which suggests there will be no let-up in the soaring demand that is fuelling higher house prices.

A recovering economy, cheap mortgages because the Bank of England is holding down interest rates, and the Help to Buy scheme are all pushing up demand.

A May survey by Knight Frank and Markit Economics found that 6.5% of UK households – which extrapolates to 1.72 million – are planning a property purchase within twelve months. That is up from 5.1% in April.

"There is no sign of demand for new housing slowing," said Gráinne Gilmore, head of UK residential research at Knight Frank.

There is a severely constrained supply of homes on the market. House building levels are running at around half what is needed to meet demand. As a result, house prices have spiked.

According to the Office for National Statistics (ONS), the average price of a UK home rose by 8% over the year to March 2014, hitting £252,000.

In London the rise is even higher because the imbalance between supply and demand is particularly acute. The ONS said the average price of a London home hit £459,000 over the same period, a 17% leap.

To keep a lid on riskier mortgage lending amid the climate of cheap credit, financial regulators imposed stricter rules on the market. These include tougher affordability tests for borrowers.

And the financial policy committee (FPC) at the Bank of England has said it will use its powers to rein in lending by tightening credit conditions if it thinks the market is getting out of control.