UK house prices surged at the fastest pace in 16 years in August as strong demand pushed the cost of an average home to a record high, defying the economic crisis caused by the coronavirus pandemic.
The latest House price Index from the Nationwide Building Society showed that Annual house price growth picked up to 3.7% in August while prices are up 2% month-on-month, after taking account of seasonal factors, as momentum builds.
Commenting on the figures, Robert Gardner,Nationwide’s Chief Economist, said:
“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.
“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 indicated that around 15% of people
surveyed were considering moving as a result of lockdown.
“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.”