UK house prices jump 2% in August

UK house prices saw a rise of 2.0% in August after taking account of seasonal effects, according to the latest Nationwide House Price Index.

Following a rise of 1.8% in July, the figures revealed that August had experienced the highest monthly rise since February 2004, when prices jumped by 2.7%.

As a result, the index also showed that annual house price growth accelerated to 3.7% during August, up from 1.5% in July.

Nationwide suggested that house prices had now reversed the losses recorded in May and June to reach a new all-time high of £224,123, with the bounce back in prices reflecting an “unexpectedly rapid recovery” in housing market activity since the easing of lockdown restrictions.

“This rebound reflects a number of factors,” said Nationwide chief economist, Robert Gardner. “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. 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.”

Trussle head of mortgages, Miles Robinson, also suggested that the figures could represent a “mini-boom ahead of the real after-effects” of the COVID-19 pandemic.

“For some, the home ownership journey is already challenging,” he commented. “First-time buyers, for example, are facing stricter criteria, with some lenders capping financial support from ‘The Bank of Mum and Dad.’ This, in addition to the shrinking range of high LTV products, is leaving many people locked out of the market.

“While it is positive to see higher LTV products being reintroduced, the number of products available overall is continuing to fall and those that are being reintroduced have much tighter criteria. Lenders are right to be cautious in the current climate, however we would urge the industry and the Government to think about ways to ensure the market remains accessible to all.”

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