House prices have increased at their fastest pace in almost three years as market activity intensifies, Halifax reported today.

A 4.6% annual rise recorded in July was the strongest uplift seen since August 2010, as greater consumer confidence boosted demand, it said.

Prices in the UK lifted by 0.9% month on month to reach £169,624 on average - marking the sixth monthly rise in a row.

Registers of Scotland data released one week ago showed the total volume of sales north of the Border has gone up by 8.1% from April to June compared to the same period a year ago.

House prices are also on the rise in many areas although the average price in Scotland fell slightly by 0.3% in the period and now stands at £153,102.

Halifax housing economist Martin Ellis said recent signs of improvement in the economy and increases in employment have helped consumer confidence, although activity is still being held back by the squeeze on budgets.

He said: "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."

Halifax's report follows similar findings from building society Nationwide that the housing market revival is gathering pace.

Lenders, surveyors, estate agents and property websites have all been reporting a strong pick-up in activity following the launch of a Government scheme called Funding for Lending one year ago, which has prompted a big increase in mortgage availability and mortgage providers to slash their rates.