House prices rebounded in August to reach a record high level, according to Halifax.

The lender saw a 1.6% rise in property prices over the month compared to July, taking the average UK price to £245,747.

This is 5.2% higher than in August 2019.

Russell Galley, managing director of Halifax, said: “A surge in market activity has driven up house prices through the post-lockdown summer period, fuelled by the release of pent-up demand, a strong desire amongst some buyers to move to bigger properties, and of course the temporary cut to stamp duty.

“Notwithstanding the various positive factors supporting the market in the short-term, it remains highly unlikely that this level of price inflation will be sustained.

“Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium-term.”

Affordability squeezed

However, rising prices combined with tighter lending criteria mean it’s getting harder for many borrowers to secure a mortgage, particularly first-time buyers.

Miles Robinson, head of mortgages at online mortgage broker Trussle, explained. “Large numbers of buyers are already locked out of the market. First-time buyers in particular are facing increased scrutiny from lenders, tighter criteria and a shrinking range of high loan-to-value (LTV) products.

“The number of 90% LTV mortgage products available has dramatically decreased, with 92% of deals pulled from the market since March this year. Alongside this, rising house prices means first-time buyers will be getting less for their money, presenting a further hurdle to getting onto the property ladder.”