The average UK house price increased by 1.1% in the year to April, accelerating from 0.9% annual growth in the 12 months to March, according to the Office for National Statistics (ONS).

It was the second month in a row with an annual increase in prices, following eight months of annual falls.

The figures were released as data from the ONS showed that Consumer Prices Index (CPI) inflation slowed to 2% in May, down from 2.3% in April.

Experts predict that, despite inflation returning to target, the Bank of England is still likely to hold fire on any interest rate cuts – which could help to ease mortgage rates – until after the General Election on July 4.

The Bank’s next interest rate decision is on Thursday.

CPI was last recorded at 2% in July 2021, later hitting a 40-year high of 11.1% in October 2022.

ONS figures released on Wednesday show house prices rose by 0.6% in England, 0.4% in Wales and by 4.5% in Scotland in the 12 months to April.

In Northern Ireland, property values increased by 4.0% annually in the first quarter of the year.

Average UK private rents increased by 8.7% in the 12 months to May, the ONS said, slowing from an 8.9% annual increase in April and below a record high annual rise of 9.2% in March.

In May, the average private rent in Britain was £1,262 per month, with the highest being in Kensington and Chelsea in London (£3,397), and lowest in Dumfries and Galloway in Scotland (£480).

Matt Smith, a mortgage expert at property website Rightmove said: “Hopefully today’s inflation drop is the first step on the journey towards lower mortgage rates in the second half of the year.

“Market expectations are still that the first Bank of England rate cut is more likely to be later in the summer rather than tomorrow, but at least today’s news will keep us on course rather than throwing a curveball.”

David Hollingworth, associate director at L&C Mortgages said: “The fall in the rate of inflation to the Bank of England target rate of 2% is positive news.

“This moves a step closer to the point when the Bank of England could feel confident enough that inflation is coming under control, opening the door to a cut to base rate.

“Today’s figures are in line with market expectation, and few are anticipating that the Bank will feel the timing is right for an interest rate cut when the MPC (Monetary Policy Committee) announces its decision tomorrow.

“It’s been a choppy backdrop for mortgage rates in recent months with fixed rates edging higher in May as markets anticipated that base rate would remain higher for longer.  Market rates seem to have eased back again a touch in recent weeks to unwind some of the hikes.

“Today’s news is unlikely to cause a ripple as far as mortgage rates are concerned and looks unlikely to be enough to tee up any surprise move to base rate.

“Consequently, mortgage borrowers hoping for an early cut in interest rates may have to wait longer than had been expected earlier in the year.”

Andrew Montlake, managing director of Coreco mortgage brokers said: “After many long months there is finally something to cheer about as inflation has hit its long-term target of 2%, which will be a shot in the arm for the economy.

“Whilst we should see a resulting fall in swap rates which should give lenders room to release some ‘summer sizzler’ products with lower rates, one swallow does not make a summer.”

Jonathan Hopper, chief executive of of Garrington Property Finders, said: “Today’s figures capture the afterglow of the surge in activity seen at the start of the year.

“Many of the sales completed in April stem from deals struck in January and February, when buyers were out in force and the market was on a roll.”

Nicky Stevenson, managing director at estate agent group Fine & Country said: “As we expect the economic landscape to continue improving, it’s likely that we will see a spike in activity as the year progresses, especially with an interest rate cut from the Bank of England on the horizon.”

Jeremy Leaf, a north London estate agent said: “Today’s announcement of a fall in inflation growth and previous drops appear to have already been factored into the expectations of many home buyers.

“A cut in base rate had also been anticipated but now there is widespread acceptance that mortgage costs will stay higher for longer.”

Jean Jameson, chief sales officer at estate agent Foxtons, said: “The mortgage market seems to have settled and along with inflation levels coming down, there seems to be a new confidence in the sales market.”

Nick Leeming, chairman of estate agent Jackson-Stops said: “Early indicators from the Jackson-Stops network suggest that the election has had little impact on buyer and vendor sentiment.”

Iain McKenzie, chief executive of of the Guild of Property Professionals, said: “The Guild remains cautiously optimistic about the outlook of the housing market for the remainder of the year. Strong buyer demand, alongside a slowdown in house price volatility, will help to keep the industry seeing robust growth.”

Nathan Emerson chief executive of of property professionals’ body Propertymark said: “The impact of what has been a challenging economic period continues to play chaos for many renters.

“Not only are personal finances stretched to the max for many people, but we have the added uncertainty of a General Election and what that might ultimately mean for renters and landlords…

“Currently, demand is continuing to seriously outstrip supply, and this remains a major contributory factor to elevated rental prices across the board.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “There is a sense that some buyers and sellers are waiting for the first rate reduction before taking action, so a cut this summer could really give the housing market a boost.”

He added: “Following a somewhat challenging first half of the year, there are hopes that a post-election bounce will lead to a more promising autumn for the housing market.”