Nationwide’s House Price Index for July has revealed that house prices climbed by 1.7% in July, bouncing back after a 1.5% drop in June.
The rise in July means house prices were also up 1.5% from a year earlier, with the average house priced at £220,936.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” it said.
But Nationwide warned of a potential “false dawn”, as July’s price was still 1.6% lower than in April at the beginning of lockdown – even after the bounceback from June, when the market posted its first annual fall in eight years.
The rebound in prices reflected a number of factors, said Robert Gardner, Nationwide’s chief economist. He said the stamp-duty holiday and pent-up demand were part of the reason for the increase.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown,” he said.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage.”
Gardner said the upward trends look set to continue in the near term, and will be further boosted by the recently announced stamp-duty holiday.
But he added a note of caution, saying: “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after effects 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.”
Commenting on the Nationwide figures, Jamie Johnson, CEO of FJP Investment , said: “Today’s House Price Index demonstrates that the stamp-duty holiday is having the desired impact.
“Previously pent-up demand is now being released to take advantage of the discounts on offer, pushing up both market activity and house prices as a result.
“The big question now is whether this initial burst in activity can be maintained over the coming months. Will house prices continue to grow or will momentum taper off?”
Johnson added: “Nonetheless, today’s index shows that the demand for real estate witnessed at the beginning of the year has not disappeared.
“Real estate remains a top investment destination and as confidence returns to the market, I am hopeful that we will see the full recovery of the property sector during this stamp duty holiday period.”
Paresh Raja, CEO of Market Financial Solutions, said: “July’s HPI is positive, but is nothing out of the ordinary.
“Buyer interest has increased since the Chancellor’s mini-budget, but this was to be expected given the circumstances.
“One thing we need to consider is whether this rise in house prices will in fact make property less accessible for more buyers during this pivotal recovery period.”
Raja continued: “Lenders are returning to the market, but getting a mortgage is still by no means a simple process.
“With house prices rising, it could make property unaffordable for certain categories of buyers who cannot access the necessary finance. That’s why lenders need to ensure homebuyers and investors are in a position to complete on sales.
“Failing this, we could see a subsequent drop in house prices and stagnant market activity.”