"The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market."
Prices rose 2.1% month-on-month, the second largest gain in 15 years, with the average house price now close to £250,000.
Robert Gardner, Nationwide's chief economist, said: "House prices are now around 13% higher than when the pandemic began.
“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. Moreover, the monthly price increase was substantial – at 2.1%, it was the second largest monthly gain in 15 years (after the 2.3% monthly rise recorded in April this year).
“The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are substantially lower (£2,500 compared to a maximum saving of £15,000 on a property valued at £500,000 before the stamp duty relief in England tapered).
“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books."
Sundeep Patel, director of sales at Together, commented: “Despite today’s unexpected bounce back, there are still signs to suggest we’re phasing out of the inflated market, with both the introduction of stamp duty and mortgage holidays starting to feel like a distant memory. Even with research suggesting house prices across UK suburbs have rocketed up at record rates thanks to city dwellers driving up the spike in the hunt for more space, the market may start feeling cooler as new buyers fade away.
“With businesses starting to implement new hybrid working policies, households will be measuring up commuting costs, childcare responsibilities and other work-related costs – all of which could see property plans stall until later this year.
“That said, there is the ongoing need for specialist lenders to cater to the ever-changing financial needs of consumers. Furlough support ends at the end of the month, and with approximately 1.9m people still reliant and facing the removal of this financial safety net, we’ll start seeing the true legacy of the pandemic and just how much it’s impacted people’s short and long-term finances.”
Tomer Aboody, director of MT Finance, added: "After the initial slowdown as stamp duty relief started to taper, buyers seem to be back out in force, deciding that the potential saving they missed out on isn't as important as being able to find their dream home.
"Significantly, low interest rates have continued to encourage buyers to stretch themselves. This state of affairs is unlikely to change anytime soon, which will continue to support prices as supply is low.
"While people are still keen on going green and protecting the environment, a bigger push is needed from the government in supporting and funding this."
