House prices rose by 1.3% in August, according to the latest figures from the Nationwide house price index.
The average price of a home rose from £164,389 to £164,729, following a 0.8% fall in prices in July.
The slight uplift has meant that house prices are now down 0.7% over the year.
It is “the largest monthly increase since January 2010, reversing the declines recorded in the previous two months. Given the difficult economic backdrop, the extent of the rebound in August is a little surprising”, says Robert Gardner, Nationwide’s chief economist.
“Nevertheless, the fact that the annual pace of house price decline moderated to -0.7% in August from -2.6% the previous month provides evidence that conditions remain fairly stable. This may be explained by the surprising resilience evident in the UK labour market, with further increases in employment in recent months, even though the UK economy has remained in recession.
“However, we should never read too much into one month’s data, especially since monthly price changes have been impacted by a number of one-off factors this year, such as the ending of the stamp duty holiday for first time buyers. These are factors that cannot be controlled by the usual process of seasonal adjustment.”
But not everyone agrees that this uptick in prices is significant. “Read nothing more into August’s 1.3% rise than low transaction levels. Prices are jumping around from one month to the next and September could just as likely see a reverse,” says Russell Quirk, director of low-cost estate agent eMoov.co.uk.
Meanwhile, several lenders have dropped their mortgage rates in response to the Bank of England’s recently launched Funding for Lending scheme, which will see £80 billion lent cheaply to banks as long as they lend the money out in the form of mortgages.
This may well affect house sales in the coming weeks and cause an uplift in transactions. So September’s house price figures will give a clearer idea of whether August’s rise is a freak occurrence or a sign of a change in the market.