According to the latest Office for National Statistics house price index, the UK average house price in August was £264,000.

This is up from £257,000 in July and followed the record set in June of £265,000. It is also £25,000 higher than in August last year.

In England, average house price growth over the year to August was estimated at 9.8 per cent, up from 7.5 per cent in July with the average house costing £281,000.

In Scotland, average annual growth totaled 16.9 per cent to August 2021, with average house prices now pegged at £181,000.

Average house price growth in Wales was estimated at 12.5 per cent, with the average house price set at £195,000.

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In Northern Ireland average house price growth was nine per cent over the year to the second quarter, and remained the cheapest place to buy a property in the UK at £153,000.

Jeremy Leaf, north London estate agent, said: “Although these figures are a little dated, they demonstrate once again the resilience of the market, which was still rocking and rolling in August even though buyers at that time would have been unable to take advantage of the stamp duty tax break. Continuing shortage of stock, low interest rates, unexpected savings and government support schemes are underpinning buying and selling activity.

“However, since August the market has calmed a little with more balance between supply and demand. Stock levels are still not increasing fast enough whereas worries about inflation and high interest rates are starting to have an impact.”

Legal & General Mortgage Club’s director Kevin Roberts said that “structural factors” such as the race for space had led to “unprecedented levels of buyer activity” and cheap mortgage rates.

However, he suggested that this could be due to a return of international buyers, as its SmartrCriteria tool showed a near tripling in searches in August on their behalf. This is due to the lifting of travel restrictions and slowing of domestic purchase activity as the stamp duty holiday rolled back.

He said: “Whether such levels of demand will persist through Q4, however, is uncertain and seeking the guidance of an experienced adviser will be key as we face into the next few months. Independent mortgage advisers are well-placed to offer bespoke recommendations and inform borrowers of the best deals to help turn this corner.”

North East reports strongest annual house price growth

The North East reported the highest annual house price growth, with prices up by 13.3 per cent in the year to August 2021. This is up from 11.3 per cent in July this year.

However, the North East still had the lowest average house price of £149,000.

London recorded the lowest annual growth, with average prices improved by 7.5 per cent over the year to August 2021, an increase from 2.9 per cent in July 2021.

The report said that this was the strongest annual growth in London since August 2016. London also remained the most expensive region, with the average house price at £526,000, the highest on record.

Gareth Lewis, commercial director of property lender MT Finance, said: “National average house price growth conceals significant regional differences. We are seeing plenty of down valuations as some sellers have overinflated ideas on value. Just because national average prices are rising, it doesn’t mean that every property is valued higher.

“There is still a desire to transact and move, which is good for the wider economy. In the right locations, the right property will do well.”

Interest rate rises

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that house price growth in August, especially in the North East, suggested there was “plenty of steam left in the market” but questioned how sustainable it was.

He said: “But will an interest rate rise slow things down? Although inflation has slowed against all odds, inflationary pressures remain which are pointing towards an interest rate rise at some point. Whether the inflation spike is transitory or structural is at the root of the debate although the Bank of England seems to be hinting at an increase.”

He added that markets had already priced for a rate rise, possibly two or three by the end of 2022, with lenders like Nationwide, Barclays, NatWest, Halifax and Platform increasing some of their rates in the past few weeks. However, he said that whilst pricing was edging up, mortgages were still “historically cheap”.