In June, the index reported, prices fell by 0.1% year-on-year which was the first time they had experienced an annual fall since 2012.

But today’s data confirms a recovery has taken place with prices also up 1.7% month-on-month taking the average house price in the UK up to £220,936.

Robert Gardner, Nationwide’s chief economist, said on a seasonally adjusted basis, house prices in July were 1.6% lower than in April and July’s bounce back in prices reflected the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions.

“The rebound in activity reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing,” he said.

“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown. Our own research, conducted in May, indicated that around 15% of people surveyed were considering moving as a result of life in lockdown.

“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared.”

Stamp duty holiday

One of the drivers of this change has been attributed to the stamp duty freeze announced in early July.

Gardner said the ‘holiday’ was likely to provide more support in the ‘near term’ but thought it would cause volatility when the deadline approached in March 2021.

He thought those benefitting the most from savings would be home movers in the south of England and London, where house prices are higher.

“Typical savings are likely to be fairly modest for the majority of buyers in the north of England, Scotland and Northern Ireland,” he added.

“In Wales, the previous lower threshold for LTT of £180,000 was already above the average house price in the principality.

“Moreover, some of the stamp duty saving is likely to get passed on in terms of higher house prices.”

Supply of high LTV mortgages

There were still concerns that because the rebound had been driven, in part, by the stamp duty changes the resurgence might only be temporary. Others said there needed to be more mortgage options to support any long-term recovery.

David Westgate, group chief executive at Andrews Property Group said: “When you consider that we have just been through an unparalleled economic shock, the property market is doing about as well as it could.

“The availability of mortgage finance at higher LTVs remains one of the primary obstacles at present.”

Meanwhile Tomer Aboody director of property lender MT Finance, said: “Let’s hope lenders look at more imaginative and flexible ways of providing mortgages going forward, assisting buyers who might have been affected by the furlough schemes and a fall in their business.”