The first house price index for August suggests they rose 2.1 per cent in just a month - despite forecasts that the stamp duty holiday taper would slow the market.
The Nationwide says the average house price in the UK now stands at £248,857 after the second largest month-on-month increase in 15 years.
Robert Gardner, chief economist at Nationwide, says: “Annual house price growth increased to 11 per cent in August, from 10.5 per cent in July. Prices rose 2.1 per cent in month-on-month terms, after taking account of seasonal effects. House prices are now around 13 per cent higher than when the pandemic began.
“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. Moreover, the monthly price increase was substantial.
“The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are substantially lower - £2,500 compared to a maximum saving of £15,000 on a property valued at £500,000 before the stamp duty relief in England tapered.
“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.”
However, agents and analysts are cautious at taking this as the sign of another spurt of house price rises - autumn will still bring a slowdown, most anticipate.
“The strong house price performance during August could be one last hurrah before the stamp duty holiday draws to a close at the end of September, after which we may see house prices and housing market activity soften. However, house prices have been stronger than we ever imagined in the eye of the pandemic and it will be a brave person who bets against them as we start to leave the storm of the pandemic behind” says Anthony Codling, founder of PropTech firm Twindig and a market commentator.
“The performance of the housing market in August tells us very little about the rest of the year. Supply has remained low as people have taken a much-needed summer break. Meanwhile, the stamp duty holiday is supporting demand in many areas of the country – the tapered £250,000 tax-free rate is only just below the average UK house price” explains Tom Bill, Head of UK Residential Research at Knight Frank.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, sees it this way: “Prices are still underpinned by an acute shortage of stock in some areas but ample supply of mortgage finance. Confirmation of post-furlough working arrangements is contributing to a release in more pent-up demand which, if the strong signs on the ground are anything to go by, is likely to continue until the end of the year at least.”
Mark Harris, chief executive of mortgage broker SPF Private Clients - now merging with Zoopla-owned Yourkeys - says: “We heard this week from the Bank of England that savings deposits have increased significantly, giving lenders even more ammunition when it comes to offering rock-bottom rates. As we head into autumn, we expect more of the same for now. With lenders reducing rates across loan-to-values, and not just for those with the biggest deposits, there are opportunities for first-time buyers and home movers alike.”