The housing market has recovered during the year
UK house prices rose for the third consecutive month in September and showed the first quarterly increase for two years, according to the Halifax.
The average home rose in value by 1.6% in September compared with the previous month, to £163,533.
And prices in the three months to September increased by 2.8% compared with the previous quarter.
The Halifax, now part of Lloyds Banking Group, said that increased demand and a lack of supply were key to the rise.
However, both could change and "constrain" prices in the coming months given the economic climate, said Halifax housing economist Martin Ellis.
The Halifax said that the annual change in prices showed that the value of the average home was 7.4% lower than September last year.
This figure is based on a three-month average, but comparing September 2009 with September 2008 shows that prices were still lower than a year ago.
This marks a continued divergence between the figures provided by the Halifax, and those published by rival the Nationwide Building Society.
Last week, the Nationwide said that prices in September had returned to the same level seen a year earlier.
However, both agree that low interest rates and fewer properties on the market have been key to the "recovery" in prices.
"The marked improvement in affordability due to the reduction in both property prices and interest rates since mid-2007 has been a key factor in stimulating higher demand," said Mr Ellis.
But he said these conditions could change.
"Continuing increases in unemployment and low earnings growth are likely to constrain the rise in demand," he said.
"There are also some signs that the improvement in market conditions is encouraging more people to put their properties up for sale.
"This development could loosen market conditions by alleviating the current shortage of supply and curb the pace of house price growth evident in recent months."
HAVE YOUR SAY
It doesn't matter if it's gone up or down a little bit, it's still a lot more expensive than it was five years ago
Valkyrie woody, Burton on Trent
Prices have risen from their trough in April 2009 by 5.9%, the equivalent of an average price rise of just over £9,000, the Halifax said. Prices were 1.7% - or £2,672 - higher in September than at the start of 2009.
Despite the low number of properties up for sale, housing market activity has picked up from a low level during 2009.
Figures from the Bank of England have shown mortgage approvals for house purchases - a good indication of future sales - have risen through most of the year.
However, mortgage approvals dipped slightly in August and were still well down on a year ago, which added to evidence that the recent revival in the property market may have reached a plateau.
The Land Registry recently said that house prices in England and Wales fell very slightly in August. Prices dropped by 0.1%, or £202, from July to take the average home price to £155,968. That was 9.4% lower than in August 2008.
Despite this, low interest rates mean home loans are still relatively affordable, the Halifax said. In the third quarter of 2009, the typical borrower devoted 30% of earnings to mortgage payments - compared with the 37% average of the last 25 years.