House prices surge to recover lockdown losses
Values jumped 1.6% between June and July, taking annual growth to 3.8%, data from Halifax found.
The price increases have erased declines experienced earlier in the year, as the housing market was put into lockdown.
The average UK price has now reached a peak of £241,604, according to the lender’s monthly tracker.
Russell Galley, managing director of Halifax, said: “The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown.
“As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices.
“Supported by the government’s initiative of a significant cut in stamp duty, and evidence from households and agents suggesting that confidence is currently growing, the immediate future for the housing market looks brighter than many might have expected three months ago.”
Looming economic uncertainty
However, there are fears economic uncertainty could start to weigh on the housing market in the coming months.
Galley said: “As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.
“In particular, a weakening in labour market conditions would lead us to expect greater downward pressure on prices in the medium-term.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “While an average house price is a limited measure of the overall health of the market, it is encouraging that it was the highest ever in July, according to the Halifax, reflecting an uptick in activity and confidence.
“The stamp duty holiday and low mortgage rates are persuading buyers to take the plunge, particularly those who have put decisions to move on hold during Brexit uncertainty and then lockdown.
“We don’t know how long this flurry of activity will continue, especially as the furlough scheme comes to an end, but for now things continue to move in the right direction.”