UK house prices rose by 1.6% in August as activity continues to pick up post lockdown.
The stats provided by Halifax will come as welcome relief for the industry and further shows that the UK economy has started to recover since restrictions have been lifted.
The increase means the average price of a property has tipped over £245,000 for the first time on record, 5.2% higher than the same month a year earlier.
Russell Galley, director at Halifax, said: “House prices continued to beat expectations in August, with prices again rising sharply, up by 1.6% on a monthly basis.
“Annual growth now stands at 5.2%, its strongest level since late 2016, with the average price of a property tipping over £245,000 for the first time on record.
“A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.
“Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained. The macroeconomic picture in the UK should become clearer over the next few months as various Government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.
“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term.”
Howard Archer, chief economic advisor to the EY ITEM Club, said: “Housing market activity in the UK has progressively picked up since the easing of the lockdown restrictions that had held back the housing sector started on 13 May in England and then progressed across the UK.
“There was an immediate pick-up in housing market activity following the easing of restrictions as pent-up activity was released.
“Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.
“Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of lockdown.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The perfect storm of pent-up demand, lockdown prompting a desire for bigger homes and the cut to stamp duty has created a strong surge in market activity, which has carried on into this month.
“The demand for mortgages continues to be strong as borrowers take advantage of some competitively-priced deals, particularly those with big deposits to put down. For first-time buyers, the situation is trickier with less choice of high loan-to-value products and advice is more crucial than ever.”