Nationwide’s house price index showed a 0.2% month-on-month fall, but the annual increase, which followed February’s 1.2% annual rise, is a sign that consumer sentiment is improving, said the society.

Robert Gardner, Nationwide’s chief economist, said: ““Activity has picked up from the weak levels prevailing towards the end of 2023, but remains relatively subdued by historical standards.”

“With cost-of-living pressures easing as inflation moves back towards target, consumer sentiment is improving. Indeed, surveyors report a pick-up in new buyer enquiries and new instructions to sell in recent months. Moreover, with income growth continuing to outpace house price growth by a healthy margin, housing affordability is improving, albeit gradually.

“If these trends are maintained, activity is likely to gain momentum, though the pace of the recovery is still likely to be heavily influenced by the trajectory of interest rates.”

The number of mortgages approved for house purchase in January was around 15% below pre-pandemic levels, which largely reflects the impact of higher interest rates on affordability.

Although mortgage rates are below the peaks seen in mid-2023, they remain above the lows prevailing in the wake of the pandemic.

‘Demand continues to outstrip supply’ in London

Matt Thompson, head of sales at estate agent Chestertons, said: “In March, the property market witnessed steady demand from buyers, although some house hunters decided to pause their search in the hope for major incentives to be announced in the Spring Budget. As this wasn’t the case, the majority of these buyers have since resumed their property search. As a result, March concluded the first quarter of the year with a busy property market – particularly in the capital, where demand continues to outstrip supply.”

The South West was the weakest performing region, with house prices down 1.7% over the year. Northern Ireland remained the best performing area, with prices up 4.6% compared with Q1 2023.

The biggest improvement in annual price growth was seen in the North. Annual price growth rose from negative 0.8% in Q4 2023 to 4.1% in Q1 2024, making it the best performing English region.

Across England, prices increased 0.4% compared with Q1 2023, while Wales saw a 1.2% year-on-year (YOY) rise. Meanwhile, Scotland saw annual price growth pick up to 3.7%.

Tom Bill, head of UK residential research at Knight Frank, said: “House prices have risen marginally, but the direction of travel for the UK market has been sideways so far this year. Demand will be unleashed once there is a more permanent drop in mortgage rates, and that requires fewer mixed signals around inflation and a rate cut to appear firmly on the horizon.

“While the outlook is more positive than six months ago, a wave of people rolling off sub-2% two-year mortgages from early 2022 is adding to the financial pressures in the system, and transactions are still a fifth below the five-year average.”

Knight Frank forecasts a “seasonal bounce” in activity and expects UK prices to rise by 3% in 2024.

The Royal Institution of Chartered Surveyors (RICS) UK Residential Survey found that when asked about house prices during the month, surveyors gave a net score of -68 per cent, which was down from -55 per cent the prior month. This was also noted as the most negative reading since 2009. 

Surveyors expect house prices to continue to fall and gave a score of -67 per cent for activity over the next three months. This was more negative than the -60 per cent reading in July. 

For the year ahead, it is predicted that house price growth will stay negative with surveyors giving a score of -48 per cent for the next 12 months, which was relatively unchanged from scores of -49 per cent in both June and July. 

Simon Rubinsohn, chief economist at RICS, said: “The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect. 

“Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance. Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period. Critically, affordability metrics still remain stretched in many parts of the country.” 

Dented buyer demand 

RICS said high mortgage rates were continuing to put pressure on house prices, buyer demand and agreed sales. 

This was evident in the decline for new buyer enquiries, which dropped marginally from a score of -45 per cent to -47 per cent. RICS said this signified a continued drop over the last few months. 

Agreed sales received the weakest surveyor sentiment since the beginning of the pandemic, with a response score of -47 per cent. RICS said this downturn was apparent across all regions in the UK. 

Looking ahead, surveyors expect a modest improvement in agreed sales and recorded a score of -38 per cent for activity over the next three months, which was slightly better than the opinions in July which garnered a score of -45 per cent. 

In the long term, it was predicted that agreed sales would stabilise with a net balance score of negative five per cent. This was compared to a reading of -25 per cent in July. 

The time from listing to completion increased to an average of 20 weeks in August. This was longer than 19 weeks a few months ago and a stretch on the 16-week average recorded in late 2021. 

There was less housing stock coming to market in August, as the score for new instructions came to -26 per cent, which was a significant fall on -17 per cent in the previous month. 

The number of market appraisals being taken was lower than in the last 12 months, with a score of -40 per cent. 

‘Deathly’ quiet August 

Sarah Coles, head of personal finance at Hargreaves Lansdown said August was always quiet but “this was deathly”. 

She added: “Prices are falling, but not fast enough to convince buyers to take the plunge. Those who are prepared to make an offer are driving a hard bargain. Sellers, meanwhile, are refusing to budge as far as they need to in order to secure a sale. It means fewer sales, and it’s taking much longer for property to shift.  

“Sluggish sales have a knock-on effect, because it gets more difficult to put a chain together. Even when they succeed, it takes so long that buyers get cold feet about paying a price they offered months ago. They want to pull out or renegotiate, and as a result, it’s getting harder to keep chains intact.” 

Coles said there was hope that the market would pick up in September but with prices and rates still relatively high, it could take a while for buyer enthusiasm to return. 

“The question is how much damage will be done to house prices in the interim,” she added. 

Steve Griffiths, chief commercial officer at The Mortgage Lender, said high inflation was impacting affordability and putting pressure on household finances. 

He added: “The tough credit market looks set to continue with the Bank of England indicating that there could be further hikes to come impacting buyer demand. With supply outstripping demand, there is an opportunity for those buyers that are able to press ahead.  

“We are also starting to see some rate reductions in the market, and for buyers, flexibility and ensuring they are speaking to a broker is critical to making sure they are aware of all options and capitalising on the best rates available to them.” 

Rents set to climb 

Tenant demand in the rental market stayed high in August as the stock of available properties continued to fall. 

The score for tenant demand came to 47 per cent and this applied to all regions in the UK. 

However, new landlord instructions remained in the negative at -20 per cent. Anecdotally, surveyors said landlords were exiting the market which RICS said was leading to a further imbalance between supply and demand. 

Over the next three months, the cost of rent is expected to rise significantly with surveyors giving a 60 per cent response score for their predictions. 

Rubinsohn added: “The other side of the softer demand in the sales market is the continuing strength of rental demand. The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high. 

“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon.” 

Leeds Building Society, which analysed government figures, found that within that figure 248,633 homes were classed as long-term empty properties that had been vacant for over six months, an increase of 4.8 per cent.

The majority of regions reported an increase in long-term empty properties, with the North West the only one to report a fall of 0.1 per cent to 40,704.

The lender said that this could make a “significant dent” in the current housing market as homeless charity Shelter has said that over four million homes are needed in the UK.

Leeds Building Society has said that the number of empty homes peaked at over 738,000 in 2008 and then gradually fell until 2017 when they started to grow.

The current figures are in line with the number of empty homes seen in 2012.

Regional differences

The North West had the largest number of empty homes at 101,770, up 1.3 per cent year on year. This was followed by the South East at 99,829, an increase of 3.8 per cent, and London at 89,508, which is a rise of two per cent.

The North East had the lowest number of empty homes at 41,596, which is an increase of 1.7 per cent, followed by the East Midlands at 59,581, a rise of four per cent. The South West reported 66,839 empty homes, up 7.8 per cent.

Overall, the report said the percentage of empty property was 2.7 per cent in England, ranging from 2.4 per cent to 3.3 per cent across different ranges.

Why are homes empty?

Leeds Building Society noted that properties could remain empty due to inheritance; previously rented property needing substantial repairs; redevelopment taking time; owners unable to fund repairs; properties signalled for demotion; and owners holding onto properties in hope of an increase in house prices.

The firm said that repurposing and retrofitting existing housing stock, including empty homes, should be a “key government property”.

Empty homes could be a solution to housing issues

Martese Carton (pictured), director of mortgage distribution at Leeds Building Society, said. “Here at Leeds Building Society, our purpose is to help people get into home ownership. It’s essential that the government delivers more new homes to meet demand and make homeownership more achievable.

“Of course, building new homes is one way it must do this, but our research shows it’s not the only way. The lack of housing supply has been a major factor in the rapid house price increases we have seen in the UK over the past few years. The UK government set itself a target of building 300,000 new homes a year, but the last time this level of annual housebuilding was achieved was 1977.”

She continued: “Although the current number of empty properties is a national disgrace, there is a growing sense that these empty properties could provide some of the solutions to the housing crisis the country faces.

“We also know that for many people, empty properties can be a blight on local communities. Therefore, National Empty Homes Week presents a great opportunity to shine a light on how empty properties can be brought back to life and how local people are really helping to regenerate their communities.”

“Last November, we published a public policy paper looking at how the government could tackle the UK’s homeownership crisis. Part of the report looked at how we could make use of our existing housing stock.

“There is little doubt that the refurbishment and repurposing of old, or empty properties, makes great financial, economic, and social sense as it could provide affordable homes for hundreds of thousands of people,” Carton noted.

The mutual said the addition to its family-assist range means family members would need to allow a temporary charge to be placed on their own homes as security in lieu of a deposit.

It said the product would appeal to parents or grandparents who are asset-rich and wanted to help their offspring onto the housing ladder but cannot afford to give them a cash deposit or simply prefer to hold onto their savings.

The 100 per cent LTV product is on a three-year variable rate of 2.75 per cent, a discount of 2.49 per cent off Beverley’s standard variable rate (SVR).

It includes a product fee of £800 plus the cost of an independent valuation of the property being purchased and, in some cases, the parental property offered as collateral.

The charge involves 20 per cent of the purchase price being placed against the parental home, which is subject to a maximum LTV ratio of 50 per cent, inclusive of any existing mortgage.

The security will remain in place for eight years, and removed subject to an independent valuation confirming the purchased property value has risen enough to at least replace the deposit. However, security can be released earlier if the deposit amount is repaid by the borrower in full.

The family member offering their home as security must also seek independent legal advice.

Simon Glass (pictured), head of new business lending at Beverley Building Society, said the lender had been prompted to add the product to its flexible range of family-assist options following Nationwide’s House Price Index, which showed a 14.3 per cent annual rise in the average house price to the end of March.

Harder than ever for FTBs

He added that this followed February’s figures which placed the average house value in the UK at a record £260,230 – an increase of £29,000 over 12 months.

Although annual growth slowed to 11.2 per cent in May – though still representing a 0.9 per cent month-on-month increase taking seasonal factors into account – the cumulative impact has made homeownership harder to achieve.

Glass added: “The situation with rising house prices is making it perhaps more challenging than ever for first-time buyers to get a footing on the housing ladder and, as a result, we’ve seen increasing interest in our family-assist mortgages generally.

“However, there was an obvious gap to try to cater for those families who are keen to help but aren’t savings-rich, though they have built up significant equity in their own homes over the years. We saw a golden opportunity to help them use that to support their loved ones in achieving homeownership, without actually having to part with any of their own hard-earned savings.”

According to Nationwide’s latest house price index, house price growth has been in double digit since November last year, reaching a high of 14.3 per cent annual growth in February. It has been falling gradually since then.

The report added that the monthly change in June was 0.3 per cent, which is down from 0.9 per cent in May.

The average UK house price reached a high of £271,613, representing a rise of over £26,000 in just over a year.

The South West was the strongest performing region in Q2, with prices increasing 14.7 per cent year-on-year. This was followed by East Anglia where annual house price growth was estimated at 14.2 per cent and Wales where growth was pegged at 13.4 per cent.

London reported the lowest growth at six per cent in Q2.

The report said that since the start of the pandemic, house prices in the South West have risen by 27.7 per cent, followed by Wales at 26.2 per cent and North West at 25.8 per cent.

The report said this could reflect change in house preferences as people moved to less urban areas.

Robert Gardner, Nationwide’s chief economist, said there were “tentative signs of a slowdown” as the number of mortgages approved for house purchase fell back toward pre-pandemic levels in April and surveyors reported a softening in new buyer enquiries.

He said: “Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low.”

Gardner added part of the sector’s resilience was likely due to strength of the labour market, where job vacancies have exceeded the number of unemployed people in recent months and unemployment was close to 50-year lows.

He said low housing supply had also further fuelled house price growth.

“The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year. Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates,” Gardner explained.

Cost-of-living crisis biggest challenge for housing market yet

Charlotte Nixon, mortgage expert at Quilter, said soaring inflation, which is expected to reach double digits later this year, the rising cost of living, increasing energy bills and minimal government support had led people to tighten their belts.

She said what started as a “pinch” had become a “heavy burden for a growing number of households, and along with rising interest rates, people’s spending power would be reduced, and cheap mortgage rates would continue to disappear.

“With wages failing to keep up, the high costs of moving home will put off prospective buyers and first-time buyers will see their hopes of getting a foot on the property ladder pushed further out of reach,” she added.

Nixon said the fall in demand could lead to a price reversal in the autumn as the energy crisis becomes more acute and temperatures fall.

“The UK is facing a severe financial problem and while the housing market managed to defy expectations and overcome the immediate problems of the pandemic, the cost of living crisis will be its biggest challenge yet,” she said.

Guy Harrington, chief executive of Glenhawk, said another month of slowing growth was a “precursor to the sharp correction about to torpedo the UK housing market”, which is caused by a “perfect storm” of inflation, geopolitical turmoil, rising interest rates and cost of living crisis.

“It’s absolute madness to think house prices will keep on rising. As caution grips the market, the outlook for 2023 looks increasingly ominous.”

Mark Harris, chief executive of SPF Private Clients, said whilst “some of the heat has come out of the market”, especially as quieter summer months approach, there were plenty of people still keen to move.

However, he said interest rate rises may “temper the ambitions of some as to what they can afford”.

Harris explained: “What has changed for all borrowers is the rate environment – gone are the sub-one per cent deals available nine months ago. Now, mortgage products are in the three to four per cent range depending on their length and loan to value.

“These rates available today reflect not only the increase in cost of funds but also lenders’ desire to moderate volumes, with many of the high street banks still sitting on large balances or even cheap Bank of England funds. Specialist lenders are repricing upwards and or streamlining their product ranges, meaning borrowers need to move quickly to secure rates.”

The partnership will allow customers to access up to 25 per cent of their property value from Ahauz as a second charge mortgage, and Tipton will then offer a first charge mortgage at a lower loan to value (LTV).

This will allow customers to boost their homebuying budget. The companies said that with cost of living and house prices continuing to rise buyers were increasingly struggling to save a deposit and could be left out of the property market.

Ahauz launched in September and has said that it has seen “significant demand” for its products, especially for existing properties. It has also partnered with Promise Money.

Karthik Srivats, co-founder of Ahauz, said: “It’s fantastic to have such an established institution like the Tipton working alongside us to help a generation trapped in renting. We have been impressed on how Tipton perceives our equity loan and its potential to be scaled across all properties, not just new builds.”

He said that this was a “challenging year” for first-time buyers and it hoped more lenders followed Tipton’s suit in improving customer choice. He added that the team was looking forward to working with Tipton and Ahauz’s broker partners to help more customers.

Becky Wheeler, marketing and product manager of Tipton, said: “In an era of rising property prices and cost of living increases, it is ever harder for first-time buyers to raise a large deposit. At the Tipton, we are proud to support first time buyers and Ahauz’s equity loan proposition is a great partnership that helps us provide lending solutions for those looking to take their first steps on the property ladder.

“We look forward to working with the Ahauz team and our broker partners offering innovative solutions to first-time buyers.”

Claudia, 44, and Noemi Mancuso, 32, have rented their sea-view flat in Bournemouth for the past eight years.

With decent jobs in finance and good salaries, they were in the “privileged position” to begin saving in a Nationwide Help to Buy ISA to help them get on the property ladder.

Claudia opened hers in 2020, while Noemi opened hers in 2019, each saving around £150-£200 a month.

Initially they wanted to buy separately since they are “adult siblings and not a couple”, and because two-bedroom properties tend to have one decent-sized bedroom and one box room.

But as they viewed more properties, they realised they were being slowly priced out. Based on their salaries and location, they could just about afford a studio flat each.

“We are stuck in the middle of ‘not being poor’ but not having significant cash flows to be able to cope with the craziness of the current market, inflation and rise in the cost-of-living.

“Although we always had in mind to buy a property, we never wanted to do the step together. We were working towards a decent deposit to be able to buy individually,” Claudia says.

The operations manager at financial software development company Twenty7Tec says they had a plan to save into their individual Help to Buy ISAs for another year, then look to buy. Based on this, they would have saved enough into the government scheme to receive a £4,000 bonus.

Eviction notice out of the blue

Their plan was quashed when they received an eviction notice giving them until 18 April 2022 to move out as the landlord wanted to convert the building into more lucrative holiday lets.

So, we decided to change to ‘plan B’ and buy together. We could then either sell in two years’ time or use it as a joint rental investment, to then go back to our original plan and buy our own properties.

“It makes sense. It is only a setback. Two is better than one. We’ll join forces, savings, and share the costs which is better than facing them on your own, especially considering where the cost-of-living is going,” she says.

‘Goodbye good intent ISA bonus’

Their new-found hope quickly turned sour. With a shortage of supply, they were priced out of the two-bedroom properties they previously rejected, three-bedroom homes were completely out of budget, and every property appeared to be over-priced.

“You start looking at something decent that you can afford, but you get gazumped by people who are not even letting you think about the property you have just seen – they have already offered at least £10,000 more than the asking price. It is the wild-wild west out there. We were still hopeful until another reality check. We will not find anything decent to buy jointly for less than £250,000. Goodbye good intent ISA bonus.”

The sisters said this sum could have helped them furnish their property and cover other moving costs.

Help to Buy ISA and Lifetime ISA

The Help to Buy ISA scheme allows people to double their bonus if buying together, but it can only be used on properties up to £250,000 (£450,000 in London). While the scheme is now closed to new entrants – it was superseded by the Lifetime ISA – first-time buyers can save a total of £12,000 each where the government adds a 25% bonus worth up to £3,000.

Claudia says: “You would think the [house price] limit is per person so if I buy a property on my own, I have a limit of £250,000 – sounds reasonable even with the price increase. But, if I buy with someone else, we will be on a joint mortgage, each of us potentially using our own Help to Buy ISA savings and buying only half each of the property. So, it is logical to me that the limit should be per person not per property.

“We are definitely going to lose out on at least £4,000 (combined) worth of bonus because the house prices have gone up so much that in Bournemouth, you cannot buy anything with that limit for two adults to live in.”

She says they considered moving further out, even to Southampton and surrounding areas, but admits “that is a life-changing decision”.

“We wanted to stay close enough to where our work and friends are”, Claudia says.

Noemi, a senior auditor at Nationwide Building Society did consider transferring to a Lifetime ISA which is available to people under the age of 40, has a higher £450,000 property value limit and comes with a maximum 25% government bonus of £32,000.

But with the current fast pace of the market, the Lifetime ISA rules state that holders need to wait one year before buying, and they didn’t want to pay another year of rent as well as watch house prices runaway further.

At the time they opened their Help to Buy ISA, they weren’t aware of the Lifetime ISA, and Claudia was already over 40 so wouldn’t have been eligible.

‘Buying a property in this climate is nerve-racking’

Claudia says the nil stamp duty limit of £300,000 for first-time buyers is also “outdated”, and the sisters have now viewed 15 properties in total. They’ve made three offers – all above their ideal budget, but one offer has been accepted which is “exciting and scary at the same time”.

They reluctantly asked their parents back home in Italy to help out so they will be gifted some money for the deposit to help them buy a three-bed flat. While advertised at £330,000, they negotiated the price down to £323,500.

“Buying a property in this climate is nerve-racking, as who knows if in two years’ time I will have negative equity. There is a lot of noise about the house price rocketing. However, the government is not moving fast enough and many of us are left on our own, struggling, while those who have cash flow come and steal any opportunities that may come up.”

The Italian who originally came to study Applied Theology in the UK but who “fell in love with this country” also criticised the higher London allowances.

“I know London properties are more expensive, but does the government realise that since Covid, Londoners are buying homes by the coast because they can afford better houses with their London-based salaries, contributing to this price hike – yet the higher limit of £450,000 still only applies for London?

“We are still in a world where London has all of the extra allowances. It’s time to review this also.”

‘Aspiration of home ownership a reality’

The Treasury can’t comment on specific cases, but said it is committed to making the aspiration of home ownership a reality for as many households as possible.

The Help to Buy ISA has played a vital role in supporting first-time buyers who are struggling to save enough to get on the property ladder.

While all savings policies are kept under review, the property price cap of £250,000 for properties outside of London (£450,000 in London) allows the government to target support at the people the scheme is intended to help.

By the end of September 2021, 604,720 bonuses had been paid through the scheme to first-time buyers supporting 460,567 property completions since the scheme’s launch in December 2015. A total of £674m has been paid out in bonuses.

Further, the mean value of a property purchased through the scheme is £175,680, compared to an average first-time buyer house price of £225,607.

However, according to the latest Halifax House Price Index, prices stand at an average high of £278,123, while Nationwide’s House Price Index revealed the average price of a home in the UK in February was £260,230, up  £29,000 in just a year.

Following the publication of the lenders’ data, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said the runaway house prices mean we’re getting perilously close to the day when nobody using the scheme can afford to buy an average starter home.

“It means that people who started a Help to Buy ISA in good faith back in 2015 could get to the point of purchase and realise they won’t get the bonus they were expecting.”

She called on the government to link the property price limits with house price inflation. Alternatively, savers could consider the Lifetime ISA if they’ve got a longer time-horizon.

The Cornish market town of Redruth – specifically the TR16 6ER postcode – has seen the largest increase in house prices across the UK over the past year. Homes there have gone up in value by 21.12 per cent, taking the average price to £305,734, said Money.co.uk.

The price comparison site said this is still slightly lower than the UK average house price of £315,059.

Newquay takes second place as house prices in the TR7 1NG postcode rose 16.43 per cent in value in the last year. The average house price there has increased to £445,451 – 41.39 per cent above the UK average.

Much of the top 10 was dominated by Preston, which saw house prices soar in the last year.

Highest risers

1. TR16 6ER, Redruth, 21.12 per cent

2. TR7 1NG, Newquay, 16.43 per cent

3. BL1 6HT, Bolton, 13.60 per cent

4. PR1 2ED, Preston, 13.46 per cent

5. PR1 5SY, Preston, 13.46 per cent

6. PR1 2ES, Preston, 13.46 per cent

7. PR1 3ST, Preston, 13.46 per cent

8. EX2 5EX, Exeter, 13.27 per cent

9. DE5 3RT, Ripley, 13.15 per cent

10. PR3 3NS, Preston, 13.07 per cent

Bargain property postcodes

The comparison site also looked at the cheapest UK postcodes and found that homes in Peterlee, County Durham, are the cheapest in the UK, with the average home selling for only £41,462 – 86.84 per cent less than the UK average.

Houses in KA1 5ER, Kilmarnock, Scotland also could see you make some huge savings, with homes costing a £51,044 on average, while St Helens, between Liverpool and Manchester came third. The WA9 1NG postcode costs an average of £63,842, making it 79.74 per cent cheaper than the average UK property while offering great transport links to bigger, metropolitan neighbouring cities.

Cheapest property postcodes

1. AL1 5HA, Peterlee, £41,462

2. KA1 5ER, Kilmarnock, £51,044

3. WA9 1NG, St. Helens, £63,842

4. HU6 9ED, Hull, £66,244

5. HU8 8UB, Hull, £69,687

6. L4 5TS, Liverpool, £70,111

7. SA5 5ED, Swansea, £76,572

8. L35 5EN, Prescot, £78,025

9. L4 1RS, Liverpool, £78,747

10. CH41 5ES, Birkenhead, £81,527

The rapid growth has pushed the average house price up to a record high of £266,000, £31,000 higher than this time last year, according to the Office of National Statistics.

In May, annual house price inflation stood at 9.8 per cent.

Wales led the charge with 16.7 per cent annual growth driving house prices up to £195,000. England and Scotland saw 13.3 per cent and 12 per cent growth respectively, leaving average house prices standing at £284,000 and £174,000. Northern Irish house prices rose nine per cent to £153,000.

Despite recording the lowest annual growth for the seventh month in a row, London’s 6.3 per cent annual rise drove the average house price in the Capital up to £510,000. The North West saw the highest annual growth at 18.6 per cent increasing average house prices to just over £200,000.

Conor Murphy, chief executive of Smartr365, said: “Today’s findings are to be celebrated and we hope that house prices will continue to grow in the coming months. Market momentum remains strong and I’m confident that the availability and pricing of credit will ensure the market retains its buoyancy post-September.”

Andy Sommerville, director at Search Acumen, said: “The tapering of the stamp duty holiday since June has finally started to cool down a market that has been red hot since last summer.

“Sellers may have to reconsider their pricing while some buyers who were prepared to stretch their finances might not be in a position to do so now they are facing a larger tax bill.

“However, we expect only a brief summer interlude before house prices start to grow again in the autumn. Demand is still extremely high by historic standards, fuelled by record low interest rates and people’s attempts to adapt their lives to key societal changes, such as home working, which are set to become a more permanent feature of the post-pandemic world. At the same time, the market is still characterised by a chronic undersupply of available housing stock. These two factors are likely to sustain house price growth later this year.”

Month-on-month, house prices rose by 0.9 per cent after a two per cent rise in August that pushed up the average UK house price to £226,129.

Most UK regions saw a small rise in annual price growth in quarter three compared to the previous quarter.

The South West was the strongest performing region, with annual price growth rising from 2.3 per cent to 5.5 per cent and for the first time since 2017, house price growth in southern England exceeded that in northern England.

Annual house price growth in London was up 4.4 per cent in Q3 driving the cost of the average property in the capital to a record high of £480,857. Homes are now selling for 57 per cent more than their 2007 price tags.

In the UK, prices are 21 per cent higher than their 2007 peak.

Scotland was one of the few areas to see a slowing in the annual rate of price growth to two per cent in Q3, compared to four per cent in Q2. Meanwhile, Wales saw annual growth accelerate to 3.8 per cent from one per cent in the previous quarter.

Pent up demand is one of the drivers behind price rises. Almost 20 per cent of households surveyed by Nationwide in September, who were considering moving before the pandemic, had put their plans on hold.

Nationwide chief economist Robert Gardner said: “Housing market activity has recovered strongly in recent months. Mortgage approvals for house purchase rose from around 66,000 in July to almost 85,000 in August – the highest since 2007, well above the monthly average of 66,000 prevailing in 2019.

“The rebound reflects a number of factors. Pent-up demand is coming through, with decisions taken to move before lockdown now progressing.

“The stamp duty holiday is adding to momentum by bringing purchases forward. Behavioural shifts may also be boosting activity as people reassess their housing needs and preferences as a result of life in lockdown.”

Weaker economy effects

Economic forecasters expect labour market conditions to get significantly weaker as tighter restrictions on movement supress economic activity and the furlough scheme is replaced with a less comprehensive jobs support package.

Despite this, some households who were not planning on a move, have changed their minds because of the crisis.

Around 10 per cent of those surveyed in September said they were in the process of moving as a result of the pandemic, with a further 18 per cent considering a move for the same reason.

This sentiment was highest in London where 25 per cent of households said there were now considering moving and close to 20 per cent said they were actually moving.

Jeremy Leaf, former Royal Institution of Chartered Surveyors residential chairman, said: “There is little sign on the ground yet that this report and others which have emerged recently reflect the calm before the storm and a fizzling out of the mini-boom.

“Certainly increased restrictions and the unwinding of the furlough scheme will have some impact on confidence but not much at the moment.

“Of just as much concern to our buyers, and particularly those vital first-time buyers, is mortgage accessibility with lenders running the risk of reducing activity in the market at a time when it is so vital to the economy generally.”