House price growth saw a ‘surprising’ rebound in August, as average property values jumped by almost £ 5,000 in the space of a month.
In the UK, the average house price in August was £ 248,857, up 11% from a year earlier, Nationwide Building Society said.
The average house price in August was £ 4,628 higher than in July, when it stood at £ 244,229.
Real estate values rose 2.1% month over month in percentage terms, marking the second largest gain in the past 15 years.
A monthly increase of 2.3% had already been recorded in April of this year.
Robert Gardner, Nationwide chief economist, said house prices were now about 13% higher than at the start of the coronavirus pandemic.
He said: “The rebound in August is surprising.”
He said it had seemed more likely that lowering the stamp duty holiday in England and Northern Ireland from July would have removed some of the heat from the market.
Mr Gardner suggested the strength could reflect strong demand from buyers of properties priced between £ 125,000 and £ 250,000.
The range of ‘zero rate’ stamp duties has been halved from £ 500,000 to £ 250,000 from July and will drop back to £ 125,000 from October.
Mr Gardner continued, “Lack of supply is also likely to be a key factor in the August price hike, with realtors reporting low property counts on their books.”
Looking ahead, he said: “Underlying demand is expected to weaken early in the year if unemployment rises, as most analysts expect, when government support programs end.
“But even that is far from certain. The labor market has remained remarkably resilient to this day and, although it is weakening, it is possible that changes in housing preferences following the pandemic will continue to support activity for some time. Again. “
Mark Harris, managing director of mortgage broker SPF Private Clients, said: “Real estate prices are rising due to lack of stock, while cheap loan rates give borrowers the confidence to seek out home ownership. their dreams in the space race.
“We heard earlier this week from the Bank of England that savings deposits have increased dramatically, giving lenders even more ammunition when it comes to offering lower interest rates.
“As we head into fall, we expect more of the same for now. With lenders lowering rates from loan to loan, and not just for those with the largest deposits, there are opportunities for first-time buyers and movers. “
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “Mortgage rates have fallen sharply in recent weeks and still have room, while high levels of job vacancies suggest that the upheaval in employment in the fourth quarter will be limited and reversed in subsequent quarters.
“As a result, we believe house prices will pick up in 2022, ending the year about 4% higher than at the end of 2021.”
Martin Beck, Senior Economic Advisor for the EY Item Club, said: “Buyers who line up for transactions and seek a lower tax bill before the October deadline (stamp duty holiday) have may have supported demand and prices in August.
“Other factors also played a role in the price increase in August, and these are expected to persist for the foreseeable future.
“Consumer confidence remained high and buyers continued to benefit from ultra-low mortgage rates.
“Meanwhile, the pandemic has had what will likely be lasting effects on real estate preferences, including an increase in demand for larger homes in a world where working from home is more common.
“Combined with the fuel for home deposits provided by the substantial savings accumulated by some households during closings, there are many accessories supporting the housing market. “
He added: “The chances of a significant drop in house prices soon seem low.”