UK house prices recorded the fastest monthly increase for 16 years in August.
House prices rose 2% in August compared to July, according to the Nationwide House Price Index. This was the fastest month-on-month rise since 2004.
And over the year, house prices increased by 3.7% to £224,123 compared to August 2019.
“House prices reversed losses recorded in May and June to reach a new all-time high,” said Robert Gardner, chief economist at Nationwide.
“The bounce back reflects an unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” Gardner said.
He said the rebound was driven by factors including pent-up demand and people reassessing their housing needs as a result of life in lockdown.
“Our research indicates that 15% of people were considering moving owing to lockdown,” said Gardner.
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Nationwide expected the trend to continue in the short-term, helped by the stamp duty holiday. But Gardner said: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead. This would likely dampen housing activity once again.”
Chris Sykes, mortgage consultant at brokers Private Finance, agreed: “Uncertainty over the strength of the UK’s economic recovery is persisting, while concerns about reintroducing a national lockdown are mounting.
“This could cause the market to readjust to a new economic reality.”
Sykes added that lifting the government ban on evictions in September could lead to an upsurge in evictions and negative publicity for landlords, potentially suppressing appetite in the buy-to-let market.
Miles Robinson, head of mortgages at Trussle, added: “There is a chance we’re experiencing a mini-boom ahead of the real after-effects of the pandemic.”
He urged the government and lenders to “think of ways to ensure the market remains accessible to all.”
Written by: Liz Bury
Source: Your Money