The Nationwide Building Society has reported that UK house prices rose by 2.0% in August, after taking account of seasonal effects, following a 1.8% rise in July.
This is the highest monthly rise since February 2004 (2.7%). As a result, annual house price growth accelerated to 3.7%, from 1.5% last month.
Robert Gardner, Nationwide’s chief economist, said: “House prices have now reversed the losses recorded in May and June and are at a new all-time high.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.
“This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.
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 (link), indicated that around 15% of people surveyed were considering moving as a result of lockdown.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this point.
“These trends look set to continue in the near term, further boosted by the recently announced stamp duty holiday, which will serve to bring some activity forward.
“However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”
Sam Mitchell, CEO at online estate agent Strike, added: “The speed at which the UK property market has bounced back has been remarkable. Pent-up demand caused house prices to reach new heights in August, and evidence of the government’s stamp duty holiday working its magic is clearly starting to show.
“On top of house prices making their comeback, sellers are receiving multiple offers and the time it takes to sell is dropping substantially. We’ve seen at least a 50% increase in demand from buyers now versus before lockdown, and on average we’re agreeing twice as many sales per week. It’s a seller’s paradise out there and now really is a great time to sell if you are thinking about it.
“Looking ahead, we’re expecting it to get even busier between now and the end of the year, with people rushing to agree offers pre-Christmas to exchange and complete in time for the stamp duty discount deadline in March. Come the new year, there are a lot of factors that may play a role — Brexit and the wider economy being the largest — and things may change. But for the moment, it’s safe to say I’ve never seen a market like it.”