Annual house price growth picked up again over the last month, increasing from 10.5% in July to 11% in August, the latest index from Nationwide reveals.

Average UK house prices reached £248,857, up by 2.1%from £244,229 in July, marking the second largest month on month gain for 15 years and a substantial turnaround from the 0.6% dip recorded between June and July when the first stage of the stamp duty holiday was phased out.

Nationwide chief economist Robert Gardner says: “House prices are now around 13% higher than when the pandemic began.

“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. 

“Moreover, the monthly price increase was substantial.

“The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are substantially lower (£2,500 compared to a maximum saving of £15,000 on a property valued at £500,000 before the stamp duty relief in England tapered).

“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.

“Underlying demand is likely to remain solid in the near term. Consumer confidence has rebounded in recent months while borrowing costs remain low. 

“This, combined with the lack of supply on the market, suggests continued support for house prices. 

“But, as we look towards the end of the year, the outlook is harder to foresee. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax.

“Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises, as most analysts expect, when government support schemes wind down. 

“But even this is far from assured. 

“The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic to continue to support activity for some time yet.”

Trussle head of mortgages Miles Robinson says: “Today’s results will come as a surprise as many expected to see a contraction in the market as the stamp duty holiday draws to an end. 

“However, while unprecedented demand has meant sellers have very much been in the driving seat this past year, there are now some great opportunities for would-be house hunters.

“In particular, next-time buyers who have equity or larger housing deposits can take advantage of some incredibly competitive interest rates. 

“In recent months, a number of high profile lenders have introduced fixed term mortgage products with an interest rate below 1%. 

“As such, there are still some significant incentives for buyers that are clearly fuelling demand.”

Trinity Financial product and communications director Aaron Strutt says: “There is still huge demand for property and buyers are as keen as ever to get on the housing ladder and that is reflected in the strong August house price data. 

“We expect the property market to be extremely active over the coming months as more borrowers look to take advantage of the super cheap rates on offer and the greater availability of low deposit mortgages. 

“Lenders are lowering their rates to attract borrowers and they still have huge lending targets to hit. 

“That bodes well for the property market moving forward.”