Annual house price growth increased to 7.3% in September 2020, up from 5.2% in August, Halifax’s house price index has found.
Prices have risen by 1.6% month-on-month, bringing the average price to £245,747.
Russell Galley, managing director, Halifax, said: “A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.
“Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained.
“The macroeconomic picture in the UK should become clearer over the next few months as various government support measures come to an end, and the true scale of the impact of the pandemic on the labour market becomes apparent.”
Galley added that rising house prices contrast with the adverse impact of the pandemic on household earnings.
With most economic commentators believing that unemployment will continue to rise, Halifax expects greater downward pressure on house prices in the medium-term.
Nisha Vaidya, mortgage expert at Bankrate UK, said: “These figures show that the house price boom that took off over the summer has continued into the autumn, with plenty of momentum still behind it. The release of pent-up demand when lockdown restrictions first began to ease has been replaced by a new wave of competition, as more and more people have joined the rush for bigger homes and more space.
“But for all the people now securing new homes, there are still some who are missing out. Although mortgage applications from first time buyers are on the rise, many of them may have been forced to put their plans on hold, as prices have escalated beyond their budgets and lenders have withdrawn low deposit mortgage deals.”
This post has originally been featured in Property Wire.