House prices in the UK hit an all-time high in August, driven by pent-up demand and low mortgage rates, according to new Nationwide figures.
The UK's largest building society announced that prices rose 2% in August after rising 1.8% in July. This was the highest monthly increase since February 2004.
Annual home price growth rose from 1.5% in July to 3.7% last month.
The average price was £ 224,123 ($ 298,864) in August, up from just under £ 170,000 10 years ago, according to Nationwide.
Nationwide chief economist Robert Gardner said the rise in prices reflected the unexpectedly rapid recovery in property market activity since the lockdown restrictions were relaxed.
“This recovery reflects a number of factors. The pent-up demand comes through where decisions are made that should be made before locking. Behavioral changes can also boost activity as people reassess their housing needs and preferences based on living in lockdown, ”he said.
The property market was hit hard in March at the height of the lockdown, as estate agents were forced to close their offices and viewings were not allowed.
On Wednesday UK's largest home builder got Barratt Developments
scrapped a £ 175 million special dividend payable in November 2021 as earnings plummeted 46% in the first half of the year following an "unprecedented disruption" to sales and construction due to the pandemic.
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said the next few months were crucial for Barratt as an extended recession would be an even tougher test as the group demonstrated its strength during the lockdown.
"The taxpayer-funded vacation program, mortgage vacation and eviction ban are expected to wind up in the fall, which could have a significant impact on future housing demand," she said.
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Barratt's shares rose 6.91% early in the morning of London trading.
Gardner said the trends will continue in the near future, compounded by Chancellor Rishi Sunak's recently announced stamp duty vacation – the transfer tax paid when buying a home.
Gardner cautioned, however, that most forecasters expect labor market conditions to weaken significantly in the coming quarters due to the aftermath of the pandemic and the unwinding of government support programs.
"If that happens, it would likely dampen residential activity again in the coming quarters," Gardner said.