Annual house price growth increased to 3.7% in April, up from 3% in March, according to the latest House Price Index from Nationwide.
This was the fastest pace of growth since February 2017, when annual growth was 4.5%, with the average house price now at £222,915.
The agency also noted there have been month on-month gains for the last seven months in a row, after taking account of seasonal effects.
However, Nationwide added that it is important to note that the impact of the pandemic was “not fully captured” in this month’s figures, as the index is constructed using mortgage approval data
As such, there is a lag between mortgage applications being submitted and approved. For this reason, 80% of cases in the April sample relate to mortgage applications that began before the nationwide lockdown.
The group added that the medium-term outlook for the housing market was now “highly uncertain”, as much will depend on the performance of the wider economy.
Nonetheless, it said that the “raft of policies” adopted to support the economy, including the support of peoples’ incomes should “set the stage for a rebound once the shock”.
For this reason, it believes the impact on the housing market will “ultimately be much less than would normally be associated with an economic shock of this magnitude”.
Robert Gardner, Nationwide’s chief economist, said: “In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum.
“Activity levels and price growth were edging up thanks to continued robust labour market conditions, low borrowing costs and a more stable political backdrop following the general election”
He added: “But housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus, and where the government has recommended not entering into housing transactions during this period.
“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months. Our ability to produce the index in the months ahead will depend on there being sufficient transactions which are representative of the wider housing market.”