Halifax has reported that, on a monthly basis, house prices in August were 1.6% higher than in July.
During the past three months, June to August, house prices were 1.3% higher than in the preceding three months (March to May).
Meanwhile, house prices in August were 5.2% higher than in the same month a year earlier.
However, Halifax said that uncertainty remains with likely greater downward pressure on prices in the medium term.
Russell Galley, managing director of 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.”
Jamie Johnson, CEO of FJP Investment, added: “Today’s House Price Index from Halifax reaffirms just how successful the stamp duty holiday has been, dispelling reservations and encouraging buyers and sellers to return to the property market. The release of the pent-up demand that accrued during lockdown is beginning to make up for the losses incurred at the height of lockdown.
The question now becomes whether this momentum can be sustained over the coming months. Will this surge fizzle out, or can we begin to expect a fully-fledged resurgence in the market? There is no definitive answer, but today’s House Price Index is indicative of the latter.
“What is certain is the reputation of UK property as a safe and secure asset. In these uncertain times, its value as an asset able to deliver significant returns and security during times of volatility still holds up. If the rate of COVID-19 infections continues to drop, I don’t see buyer momentum disappearing anytime soon.”