"Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth"
House prices in the three months between June and August were 0.1% higher than in the previous quarter and 2.6% higher than in the same three months a year earlier.
This is higher than the 2.1% recorded in July but well below the peak of 10% in March 2016 when transactions grew sharply ahead of the introduction of new higher stamp duty tax rates for buy-to-let and second homes.
House prices rose by 1.1% between July and August, following a 0.7% increase in July.
Russell Galley, Managing Director at Halifax Community Bank, said: “The annual rate of growth increased from 2.1% in July to 2.6% in August with the average house price now £222,293, which is just above the previous high of December 2016 (£222,190).
“Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42 year low. However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers.
“House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, commented: "Before we get too carried away by the numbers it is worth remembering that house-price growth is being underpinned by a shortage of supply, including housebuilding, historically low mortgage rates and relatively low unemployment, rather than strong buyer demand. Fewer transactions are taking place where affordability has been most stretched due to lack of new and existing stock, such as in London - and inflation higher than wage growth.
"The short-term impact of Brexit on the housing market was probably overestimated but the longer term effects may have been underestimated. However, now that the government is negotiating the UK’s exit from the EU, further uncertainty seems inevitable until the final outcome becomes clearer."
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: "Swap rates have remained pretty flat since the end of July and with many economists not expecting interest rates to rise until 2019 despite inflation remaining above target, the cheap mortgage rates that borrowers have been enjoying are unlikely to disappear any time soon.
"As we head into the autumn which is traditionally a busier time of year for the market as people return from their holidays with renewed vigour to get things done and move by Christmas, there are plenty of attractive mortgage deals to tempt them."
