House prices leapt by 10.2% year-on-year in July marking the strongest annual upswing seen since 2007, Halifax has reported.
The increase pushed average property values to £186,322, with a 1.4% uplift also recorded month-on-month, reversing a 0.4% monthly dip in June.
The annual increase in house prices is the strongest seen since a 10.7% rise was recorded in September 2007 and the latest figures also mark the first time since then that year-on-year house price growth has hit double digits.
Halifax said that month-on-month price changes can often be volatile and quarterly movements in prices tend to give a better indication of the underlying trend in the market.
On a quarterly basis, house prices in the three months to July were 3.6% higher than in the three months to April, representing the biggest quarterly uplift since December 2006.
Stephen Noakes, mortgages director at Halifax, said: "While supply remains low, housing demand continues to be supported by a continuing economic recovery, growth in employment, improving consumer confidence and low mortgage rates."
Halifax's figures also reveal that average house prices are now more than five times wages for the first time since summer 2008.
In a sign that borrowers are stretching their finances more to own their home, the price-to-earnings ratio edged up to 5.02 in July, from 4.96 in June.
The last time that property values were as much as five times average earnings was July 2008 and the last time the ratio was higher than it is now was June 2008, when it reached 5.09.
Halifax uses average earnings for men working full-time to calculate the ratio for house prices relative to average wages.
Mr Noakes said that earnings growth "is still lagging behind consumer price inflation".
House prices have continued to record strong increases despite some signs that the pace of the housing market recovery has been slowing down slightly since stricter mortgage lending rules came into force at the end of April.
The Mortgage Market Review (MMR) rules force lenders to ask applicants more detailed questions about their spending habits to check whether they could truly afford their repayments. Lenders also have to apply "stress tests" to make sure a borrower could comfortably cope as and when interest rates rise.
A separate house price report from Nationwide Building Society, which was published last week, also reported strong growth in property values. Nationwide said its study showed prices have jumped by 10.6% annually, although it said the pace of growth is slowing.
Howard Archer, chief UK and European economist for IHS Global Insight, said: "On balance, we take the view that house prices will keep on clearly rising over the coming months but there will be some moderation from the recent peak levels.
"More stretched house prices-to-earnings ratios, the prospect that interest rates will soon start to rise, albeit gradually, and tighter checking of prospective mortgage borrowers by lenders will likely have some dampening impact on buyer interest.
"Even so, with the economy seen holding up pretty well going forward, employment high and rising, consumer confidence elevated and earnings growth likely to improve, and with housing supply remaining tight in many areas, house price growth will probably slow gradually."