The latest figures from Halifax showed that house prices saw a monthly rise of 1.6% in August, representing a year-on-year increase of 5.2%.
Richard Galley, managing director at Halifax, said that the latest figures “continued to beat expectations” in August, following the housing market readjusting after COVID-19 conditions.
The annual growth recorded in August was the strongest level seen since late 2016, with the average price of a property going over £245,000 for the first time on record, according to Galley.
The latest figures follow a surge in market activity which drove up house prices, with Galley suggesting that this rise was “fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties and the temporary cut to stamp duty.”
“The government incentives paired with low interest rates has created a great opportunity for landlords and homeowners as there appears to be strong demand and positive levels of housing stock for sale.
“The withdrawal of 90% [loan-to-value (LTV)] mortgage deals from the market may see confidence waver at the bottom end of the market, particularly for first-time buyers and those with smaller deposits however there are still deals to be made.”
Miles Robinson, head of mortgages at Trussle, said it is important to consider the wider economic environment despite the latest house price rise: “While rising house prices might be a sign of market recovery, it’s important to consider how the wider economic environment could be affecting borrowers.
“We’re fast approaching the end of the furlough scheme and with it a period where the employment market could be incredibly challenging for many. As such, the demand we’re currently seeing might begin to fade.
“In addition, large numbers of buyers are already locked out of the market. First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products.
“The number of 90% LTV mortgage products available has dramatically decreased, with 92% of deals pulled from the market since March this year.
“Alongside this, rising house prices means first-time buyers will be getting less for their money, presenting a further hurdle to getting onto the property ladder.
“While lenders are right to be cautious in today’s climate, we’d urge the industry to ensure the market remains accessible to all.”
Some commentators were wary of the positive market conditions recorded in August, however, questioning how long this streak may last.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “How long can this mini-boom continue? This is a question I am often asked and these figures provide some of the answers.
“They confirm what we have been seeing on the ground over the past month or so as buyers and sellers continue to shrug off the imminent yet inevitable worsening economic news.
“However, we have noticed that there is no real sign of change yet although our viewing-to-offer ratio has dropped a little compared with last month, which is probably more to do with the summer holiday pause than a significant market correction.”
Anna Clare Harper, author of ‘Strategic Property Investing’, added: “Positive house price performance unsurprisingly reflects the release of pent-up demand and supply, and the impact of the temporary stamp duty holiday.
“Many in the industry feel this mini boom will be short-lived, given economic circumstances and forecasts.
“However, it is worth noting that property both follows and affects consumer confidence. The fundamental drivers of housing demand are strong in an environment of low interest rates, low new-build rates and low inventory.”