A record rise in house prices in May continued to confound forecasts and generate pressure for the Bank of England to raise interest rates.

The 4.2 per cent jump is the highest since the Halifax started compiling figures and poses a dilemma for the Bank of England whose low interest rates, while good for manufacturing, are fuelling a boom in the property market.

The price of an average home is now 18.5 per cent higher than last year.