Housing market experts are divided over how to interpret figures from the Office for National Statistics and Land Registry showing prices across the UK increased by 3.4 per cent in the year to the end of June.

The official house price index is a lagging indicator of the market, as it typically takes six to eight weeks for a purchase to complete.

June’s figures are therefore likely to reflect some distortion as a result of lockdown restrictions introduced on March 23, under which people were advised not to move house.

The ONS says that June’s increase may “reflect some degree of pent-up demand following the easing of lockdown restrictions, particularly at the higher end of the price scale”.

Some commentators have been unwilling to read too much into the June data.

Andrews Property Group chief executive David Westgate says: “The UK HPI is so out of date that it’s not an accurate barometer of the state of the housing market today.

“June figures reflect offers typically made and accepted in late March and April when estate agents had closed their doors due to Covid-19 restrictions.

“Transactions were at such rock bottom levels that it’s highly probable that the average UK house price in June is based on the lowest number of completed sales we’ve ever seen in a single month.”

Westgate believes that the current “mini-boom” is fuelled by pent-up demand and the government’s stamp duty holiday – although today’s ONS figures do not yet reflect the tax cut. 

As such the drivers of current momentum are temporary and beyond the impact of these factors the outlook is highly uncertain, he believes.

Westgate adds: “The market has a spring in its step but we should be mindful how precarious the economic climate remains and how quickly consumer confidence can drain away.

“We are not out of the woods by any stretch, and there are growing concerns that the stamp duty freeze is fueling unsustainable house price growth.

“Growth needs to be controlled, and lenders have reacted by cutting higher loan-to-value products to avoid a potential boom and bust scenario if house prices carry on rising unchecked until next March when the stamp duty holiday ends.

“It would also be foolhardy to disregard the strong economic headwinds that are blowing in, both pandemic and Brexit-related.

“The furlough scheme is due to end in just over a month’s time, and millions of people still haven’t returned to work. We are also no closer to thrashing out a trade deal with the EU.

“If unemployment numbers were to rise significantly, and a no-deal Brexit becomes more likely, this could severely dent consumer confidence and see the brakes applied to a booming housing market overnight.”

Trussle head of mortgages Miles Robinson shares this caution.

He says: “As many in the industry have warned, it’s likely that this growth will be temporary. 

“We are facing a challenging economic climate that will likely stifle demand and cause a dip in house prices.

“These pressures will only be compounded by a mortgage market that some are already finding difficult. 

“First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high LTV products. 

“While lenders are right to be cautious during times of uncertainty, we’d urge the industry to ensure the market remains accessible to all and for lenders to reassess their offering of higher LTV mortgage products.”

Quilter mortgage expert Karen Noye says that in order to gauge the health of the market its vital to look at transaction volumes rather than just prices alone.

She says: “The June data fails to capture the massive increase in demand that followed the stamp duty holiday news, but despite this still shows that post the lockdown easing, UK house prices increased by 3.4 per cent in the year to June.

“However, the shocking figures that reveal quite how damaging the lockdown was to house prices are that on a seasonally-adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 37.4 per cent lower than a year ago. 

“Pent-up demand clearly did cause a spike following the easing of lockdown conditions as UK property transactions statistics for June showed that between May and June, transactions increased by 28.4 per cent.”

Noye says that demand surged further following the stamp duty announcement in Rishi Sunak’s summer statement on July 8.

She says: “The demand since then has been phenomenal and has at least for the moment pushed houses prices even further up. 

“However, the interesting comparison will be in a year, when the true economic effects of the pandemic have really taken hold of the UK and measures such as the furlough scheme and the stamp duty holiday have been rescinded.”

She shares other commentators’ concerns about the lack of high LTV products for first-time buyers.

Noye adds: “This could have a detrimental impact on the whole housing market. 

“This is because if these buyers fail to find a place in the market it can and will have a knock on impact all the way up the chain. 

“Unless there is a big price correction, first-time buyers are not going to see their chances of getting on the housing ladder improve any time soon.”

MT Finance director Tomer Aboody shares Noye’s concerns about low levels of transactions.

He says: “Sales volumes are still a long way off where they were a few years ago, and this is creating a mini-boom with prices rising because there is less stock available. 

“This has to be assessed and helped in some way soon, whether with further stamp duty allowances or more flexibility passed onto banks to provide mortgages. 

“Liquidity is there but accessing it isn’t always easy for would-be buyers and this is holding things back unnecessarily.”

However, London estate agent and former Royal Institution of Chartered Surveyors residential chairman Jeremy Leaf remains optimistic based on his experience in the capital.

He says: “This comprehensive survey reflects prices paid for property and so is an indicator of some optimism.

“We are being told repeatedly that this mini-boom will not continue as the job retention scheme unwinds and unemployment rises but we are not seeing many signs of that on the ground. 

“If anything, the market is being more restrained by lender caution and lack of capacity to deal with the number of enquiries rather than demand fizzling out.”

Meanwhile, Search Acumen director Andy Sommerville casts doubt over whether the current market momentum is sustainable.

He says: “Robust conditions may paint a rosy picture but in reality, signs that the market is overheating are starting to emerge. 

“The difficulties that prospective buyers are experiencing in securing a mortgage are likely to impact first-time buyers the most and could cause a dip in the new-build sector, which is largely kept afloat by this group.

“Further, it has been a tough task for public bodies, such as Land Registry and local authorities, to keep up. 

“We are only a few weeks in, and we are already seeing the age-old problem of search delays starting to rear its ugly head. 

“It is time the government acted decisively by tackling delays through proper investment and an acceleration of the digitisation programme.”