August house price rise is fastest for 16 years

House prices rose 2% in August taking them to an all-time high, according to the latest monthly index from the Nationwide.

The mortgage lender said the rise – the steepest monthly increase since 2004 – meant prices had now more than recovered all of the losses sustained earlier in the covid lockdown, recording an average price of £224,123, beating the previous high set in April.

The Nationwide said the rise meant that prices were up 3.7% year on year, a remarkable turnaround given that just two month earlier prices recorded their first annual fall for eight years.

Robert Gardner, Nationwide chief economist, said the rebound reflected pent up demand built up during the housing market closure in lockdown, but was also likely to have been prompted by behavioural shifts as people reassessed their housing preferences.

He said: “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.”

The Nationwide’s figures came as the UK government also published monthly house price statistics for May, which had previously been suspended because of the low volume of transactions. The figures showed that prices rose 0.3% in that month, when the market was still partially closed, with prices up 2.9% year on year.

Director of estate agent Benham and Reeves, Marc von Grundherr, said home buyers and sellers had been “presenting two fingers to covid”. He said: “The demise of the UK property market has been greatly over prophesied in recent months and these latest figures are yet further proof that it will take far more than a period of muted activity to alter its impenetrable nature.”

Lucy Pendleton, property expert at independent estate agents James Pendleton, said the figures showed the property market had staged a “barnstorming” recovery, with buyers “engaged in a pitch battle for property”.