WELSH house prices continued their upward trend in the first quarter of the year with figures released by Principality Building Society showing an annual increase of 11.1% compared with 6% a year ago.

This is the fastest rate of growth for Welsh house prices recorded by the society for over 10 years.

Peter Griffiths, (pictured) chief executive of the Principality Building Society, said: "Despite a sustained period of rising prices, housing still remains very affordable because mortgage rates are at their lowest level for nearly 40 years.

"The combination of rising prices and affordable mortgage costs has created a sustainable housing market because it boosts buyers' confidence and stimulates demand.

"With take home pay rising and housing perceived as a good investment, we are currently enjoying ideal conditions for a strong market."

The society's estate agency subsidiary, Peter Alan, is enjoying record numbers of house sales, up 20% on last year.

Indeed, house sales have been so strong that there is a shortage of properties for sale with more people looking to buy a house in South Wales than there are currently houses for sale.

With strong demand, this shortage of supply is helping to sustain double digit house price increases.

But the trend is unlikely to continue indefinitely as it is believed house price rises will have to slow down to a more sustainable figure, which will be closer to the rate of inflation.

The trigger for this could come from encouraging signs of recovery in the UK economy and suggestions that the Bank of England will increase interest rates in the second half of the year.

The buoyant housing market in Wales has had a knock-on effect for the Principality's mortgage business, where lending for the year is up 13% on the same period last year. South East Wales remains the most buoyant region with a 12.4% increase in prices, while all areas have seen increases substantially in excess of inflation.

Overall, Cardiff has the highest average price of housing at £97,317, followed by Newport at £72,628.