House prices soared by 7.3 per cent in the year to September, the steepest annual increase since June 2016, according to the latest index from Halifax.

The average UK property price reached £249,870, as mortgage applications hit a 12-year high.

Meanwhile, month-on-month house price growth was 1.6 per cent, which was unchanged from August.

Halifax managing director Russell Galley says: “September saw a third consecutive month of substantial gains. 

“The annual rate of change will naturally draw attention” he says, but  notes that “context is important with the annual comparison, as September 2019 saw political uncertainty weigh on the market”.

Galley says: “Few would dispute that the performance of the housing market has been extremely strong since lockdown restrictions began to ease in May.

“Across the last three months, we have received more mortgage applications from both first time buyers and homemovers than anytime since 2008. 

“There has been a fundamental shift in demand from buyers brought about by the structural effects of increased home working and a desire for more space, while the stamp duty holiday is incentivising vendors and buyers to close deals at pace before the break ends next March.”

He adds: “It is highly unlikely that the housing market will continue to remain immune to the economic impact of the pandemic. 

“The release of pent up demand and indeed the stamp duty holiday can only be temporary fillips and their impact will inevitably start to wane. 

“And as employment support measures are gradually scaled back beyond the end of October, the spectre of increased unemployment over the winter will come into sharper relief.

“Therefore while it may come later than initially anticipated, we continue to believe that significant downward pressure on house prices should be expected at some point in the months ahead as the realities of an economic recession are felt ever more keenly.”

MT Finance director Joshua Elash says: “These numbers are phenomenal and demonstrate the real extent and determination of the pent-up demand for homes and investment property across the country.

“Transactional volumes are up again for the fourth consecutive month. Values are up again with the highest growth in over four years. 

“With continued high levels of liquidity in the market, strong underlying demand, and a government committed to supporting the sector, it’s hard to see where this stops. 

“The property market looks and feels like one of the only market sectors outside of the digital space which is thriving. It’s breathtaking.  

But he warns: “A word of caution – next month, when the impact of the unwinding of the chancellor’s furlough scheme begins to be felt, it may serve as a catalyst and we may begin to see a shift in the data as the number of unemployed rise.”

SPF Private Clients chief executive Mark Harris says: “The Halifax has received more mortgage applications from first-time buyers and home movers than at anytime since 2008 – and it will not be the only lender in this position. 

“Service levels have suffered across the board partly because of this level of demand, coupled of course with staff working from home, and delays further along the process with surveyors and solicitors also trying to cope with more work than usual. 

“Brokers are busy, both with new business and remortgaging, as borrowers take advantage of cheap mortgage rates.

“Not everyone can access the cheapest rates, however, with the divide between sub-80 per cent pricing and above growing all the time. 

“A number of lenders have increased pricing in the 80 per cent-plus range, which is mainly affecting first-time buyers, while those with bigger deposits continue to attract the most competitive deals.”