UK house prices hit a record high last month as pre-Covid demand and the Stamp Duty holiday started to flow into market activity, Nationwide claims.

The lender’s August house price index shows annual house price growth was up 3.7% annually, more than double the rate of growth in July, to £224,123.

Average prices were also up 2% on a monthly basis.

This is the highest monthly rise since February 2004.

Robert Gardner, chief economist for Nationwide, said: “This rebound reflects a number of factors. Pent up demand is coming through, where decisions taken to move before lockdown are progressing.

“Behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown.

“These trends look set to continue in the near term, further boosted by the recently announced Stamp Duty holiday, which will serve to bring some activity forward.

“However, most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the aftereffects of the pandemic and as government support schemes wind down. If this comes to pass, it would likely dampen housing activity once again in the quarters ahead.”

It comes as the Land Registry released its latest house price index yesterday for May which showed average prices were up 2.9% annually to £235,673.

Its transaction data for March 2020, which is predominantly made up of pre-Covid activity, showed sales decreased by 18.8% annually on a provision basis.

Commenting on the figures, Jonathan Hopper, chief executive of Garrington Property Finders, said: “This May data does show the first glimmers of what went on to be the summer’s big bang in house price growth.

“English estate agents only reopened their doors halfway through May and they remained closed throughout the month in Scotland. But even while running at reduced capacity, the property market still delivered a respectable rate of price growth.

“In the 12 months to the end of May, average prices rose at the same pace they did in the year to the end of March – suggesting the market successfully rebooted as soon as lockdown eased.

“All the indicators are that since then the market has accelerated rapidly, both in terms of activity and prices.

“Estate agents in some areas are being swamped with offers – with coastal and country properties proving the most popular.”

Sam Mitchell, chief executive of online estate agent Strike, described the current market as remarkable.

He said: “Pent-up demand caused house prices to reach new heights in August, and evidence of the Government’s Stamp Duty holiday working its magic is clearly starting to show.

“On top of house prices making their comeback, sellers are receiving multiple offers and the time it takes to sell is dropping substantially.

“We’ve seen at least a 50% increase in demand from buyers now versus before lockdown, and on average we’re agreeing twice as many sales per week. It’s a seller’s paradise out there and now really is a great time to sell if you are thinking about it.

“Looking ahead, we’re expecting it to get even busier between now and the end of the year, with people rushing to agree offers pre-Christmas to exchange and complete in time for the Stamp Duty discount deadline in March.

“Come the new year, there are a lot of factors that may play a role — Brexit and the wider economy being the largest — and things may change. But for the moment, it’s safe to say I’ve never seen a market like it.”