"We've already begun to see many lenders increase their rates this month, and there could be further rate rises on the horizon from the Bank of England."
This is above the average annual growth rate, which the ONS says has "remained broadly under 5%" during 2017 so far.
The main contribution to the increase in UK house prices came from England, where house prices increased by 5.3% over the year to August 2017, with the average price in England now £244,000.
Wales saw house prices increase by 3.4% over the last 12 months to stand at £150,000. In Scotland, the average price increased by 3.9% over the year to stand at £146,000. The average price in Northern Ireland currently stands at £129,000, an increase of 4.4% over the year to Q2 2017.
The North West showed the highest annual growth, with prices increasing by 6.5% in the year to August 2017. This was followed by the East of England, East Midlands and South West, where prices increased by 6.4% in each. The lowest annual growth was in London, where prices increased by 2.6% over the year, followed by the North East at 3.7%.
Ishaan Malhi, CEO and founder of online mortgage broker Trussle, said: “House price growth is good news for home owners, but won’t be welcomed by those looking to get on the ladder. We've already begun to see many lenders increase their rates this month, and there could be further rate rises on the horizon from the Bank of England.
“If the Bank of England does decide to raise the base rate next month, it will have an immediate impact on those on a variable rate mortgage, who will see their monthly mortgage payments creep up. With more rate rises potentially on the horizon, those nearing or beyond the end of their initial mortgage term should already be thinking about switching to a more suitable deal.”
John Goodall, CEO and co-founder of buy to let specialist Landbay, added: “House prices rose across the UK in August as the market shrugged off any signs of a prolonged summer slowdown. Although record low mortgage rates will be helping those who have already stumped up a deposit, escalating house prices will come as yet another blow to aspiring homeowners looking to get their foot on the housing ladder.
“It is essential that the Government doesn’t lose focus on addressing the housing crisis and makes good on its promise to build the thousands of new, affordable homes that people desperately need. Fast approaching, next month’s Autumn Budget will be a chance for the Chancellor to reassure the industry on these plans and, I hope, address some further urgent matters. Investment and planning in the areas where rental and house price growth is reaching particularly unsustainable levels, like the East of England, will be key.”
