House prices continued to rise dramatically according to the latest set of figures in the Nationwide House Price Index.
House prices across the UK rose by 2% in August and 3.7% year on year, with the average house price now standing at £224,123. This is the highest monthly rise since February 2004.
These latest figures are no surprise given the pent-up demand that has been unleashed on us all, fuelled by the powder keg that is the stamp duty holiday.
However, two words spring to mind: reality check. As strong as the property market is right now, it will not last.
Demand is understandably strong after lockdown and the added bonus of the stamp duty holiday, but unemployment is rising by the day and the economic outlook is highly uncertain as the furlough scheme ends.
In the final months of the year we may start to see a reversal in the current rate of house price growth, as the true impact of Covid-19 on the economy shows through.
On a positive note, there are many people whose lives and jobs are largely untouched by the pandemic who will continue to move home even as the broader economic picture deteriorates.
What we’re also seeing is a huge amount of people looking for a second property or holiday home. The Stamp Duty holiday has also spurred more landlords into action, too, while mortgage rates in this sector of the market have never been as cheap.
For first time buyers, sadly, the stamp duty holiday is largely academic as lenders are struggling to provide the mortgage finance. If lenders can improve in this area, that will provide additional support to the market.
What is clear though, is that the next 4-6 weeks will prove to be the most crucial part of the year, not just for the housing market.