House prices rose by 0.4% in May, according to the latest house price index from the Nationwide Building Society.

The mutual said the increase providing further support for the view that the housing market is gradually gaining momentum.

The average price price of a home is now £167,912, up from £165,586 in April.

The three month on three month measure of house prices, which is a smoother measure of the underlying trend, has been in positive territory since October last year. The annual rate of house price growth also ticked up to 1.1% in May – the fastest pace since November 2011.

Robert Gardner, Nationwide’s Chief Economist, said: “It’s not just prices – a number of measures of housing market activity have also started to move higher. In the first four months of 2013 the number of property transactions was running at around 5% above the monthly average prevailing in 2012. The number of mortgage approvals for house purchase in the first quarter of 2013 was also around 4% above last year’s monthly average.

“A number of factors are likely to be contributing to the pick up in activity. There has been an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme. Indeed, mortgage rates have fallen back towards all time lows in recent months.

“With the UK returning to growth in the first quarter of 2013, the improvement in wider economic conditions may also be playing a role in boosting sentiment.”