UK house prices increased by 3.4 per cent to £237,834 in the year to June, up from just 1.1 per cent in May, the latest index from the Office for National Statistics and Land Registry has shown.

The figures reveal monthly house price growth of 2.7 per cent which also marked a sharp acceleration from 0.3 per cent in May.

House price growth was strongest in England where prices increased by 3.5 per cent over the year to £254,000.

Northern Ireland was next with annual growth of 3 per cent to £141,000, followed by Scotland with an increase of 2.9 per cent to £157,000 and Wales with a rise of 2.8 per cent to £168,000.

Within England, the region with the strongest growth was the East Midlands where prices rose by 4.5 per cent to £200,682.. 

The lowest annual growth was in the North East, where prices increased by 1.7 per cent to £131,742.

London was among the strongest performing locations with prices up by 4.2 per cent over the year to £490,495.

Gatehouse Bank chief commercial officer Paul Stockwell says: “This is the first comprehensive look at the performance of the UK property market following lockdown, building on previous indices and reports of home finance application numbers edging closer to pre-pandemic levels. 

“The year on year rise in prices shows just how quickly buyers and sellers pushed on with their delayed transactions when the market reopened in June, driving demand even before the stamp duty discount was announced.”

He says that the sharp increase in London prices comes despite reports that many are leaving the capital in search of larger properties further afield where they can work from home. 

Stockwell adds: “We can be optimistic that these shoots of recovery are just the beginning. 

“Lenders have been exceptionally busy with an abundance of mortgage applications since the stamp duty announcement in early July incentivised buyers, and that healthy demand seems to be persisting as we enter the autumn.”

However, Private Finance director Shaun Church takes a different view.

He says: “Robust market conditions are likely to be short lived. 

“An uptick in infections and mounting concern over the reintroduction of national and local lockdowns is weighing on consumer confidence. 

“This could cause buyer activity to dip, resulting in the market readjusting to a new economic environment.

“Lenders are taking a risk-averse position in response to high uncertainty levels in the UK economy. 

“Mortgage providers are increasing rates on higher loan-to-value products to reduce exposure to riskier borrowing propositions. 

“Unfortunately, this will create barriers to entry for first-time buyers, the group of people that have been hardest hit financially by the pandemic.

“Delays in mortgage approvals are also sharply extending due to lenders struggling to clear a swelling backlog of enquiries, resulting in longer waits for buyers to kick-start their purchases.”