Annual house price growth rose to 5.8% in October – its highest level since January 2015, according to the latest figures from Nationwide.
UK house prices rose 0.8% month-on-month in October after taking account of seasonal effects, following a 0.9% rise in September.
The figures suggest that the economic recovery has lost momentum in recent months with economic growth slowing sharply to 2.1% in August, down from 6.4% in July, despite a strong boost to the hospitality sector from the Eat Out to Help Out scheme, which has since expired.
Labour market conditions also weakened with the unemployment rate rising to 4.5% in the three months to August – still low by historic standards, but up from an average of 3.8% in 2019.
“Nevertheless, housing market activity has remained robust,” said Nationwide's chief economist, Robert Gardner.
Mortgage approvals for house purchases climbed to 91,500 in September – the highest level since 2007.
“The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy,” Mr Gardner said.
“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near-term boost by bringing purchases forward.
“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March,” he said.