British house prices leapt to hit an all-time high in August, mortgage lender Nationwide said on Wednesday, adding to signs of a sharp rebound in the country’s housing market after the coronavirus lockdown.
Prices jumped by 2.0% from July, the biggest month-on-month increase since 2004 and far outstripping the median forecast for an increase of 0.5% in a Reuters poll of economists.
Nationwide said prices were 3.7% higher than a year earlier. The Reuters poll had pointed to a 2.0% annual increase.
“House prices have now reversed the losses recorded in May and June and are at a new all-time high,” Robert Gardner, Nationwide’s chief economist, said.
The COVID-19 lockdown had prompted people to rethink the kind of home they want to live in as well as creating pent-up demand, Gardner said.
Home-buyers have also been given an incentive by British finance minister Rishi Sunak, who cut a tax for house purchases in July as he sought to spark the broader economy which shrank by a record 20.4% in the April-June period.
Other measures of the housing market have pointed to bounce-back too.
Data published on Tuesday by the Bank of England showed mortgage approvals rose unexpectedly strongly in July.
“However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after-effects of the pandemic and as government support schemes wind down,” Gardner said.
“If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”
Sunak has shunned calls to extend his huge, state-funded job retention scheme which is being wound down and is due to expire at the end of October. Economists expect a sharp rise in unemployment in the coming months.
Nationwide said the average price of a home hit 224,123 pounds ($299,876) in August, up from just under 170,000 pounds 10 years ago.