House prices reached a record high in August according to Nationwide, cancelling out the losses seen in May and June.
Prices saw their highest monthly rise since February 2004, the building society’s latest house price index shows, rising by 2% month-on-month to an average of £224,123. Annual house price growth accelerated to 3.7%, up from 1.5% in July.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions” said Robert Gardner, chief economist at Nationwide.
“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 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.”
The government’s announcement on 8th July that stamp duty will be temporarily removed up to £500,000, has also helped boost house prices in recent weeks, with buyers looking to take advantage of the suspension before it finishes at the end of March next year.
An uncertain future
Although the property market bounced back in August, the building society acknowledged that rising unemployment as a result of the pandemic, combined with the end of government support schemes such as the furlough scheme, would be likely to dampen housing activity in months to come.
Getting onto the property ladder remains challenging for first time buyers, with a limited number of low-deposit mortgages available and some lenders tightening their criteria.
However, homebuyers with good deposits to put down, or a healthy amount of equity if remortgaging, still have much wider range of competitive mortgage deals to choose from.