House prices bounced back in July, climbing 1.7% during the month compared to a 1.5% fall in June, according to the Nationwide.
“The bounce back in prices reflects the unexpectedly rapid recovery in housing market activity since the easing of lockdown restrictions,” it said.
Activity has been boosted by pent-up demand and the stamp duty holiday.
But the lender warned: “There is a risk this proves to be something of a false dawn.”
The average price in July was £220,936, according to the Nationwide. However, while prices were up 1.5% from a year earlier, July’s price was 1.6% lower than in April at the beginning of lockdown.
However, it was a marked change to June’s prices when the market posted its first annual fall in eight years.
The rebound in prices reflected a number of factors, said Robert Gardner, Nationwide’s chief economist.
He said pent up demand was coming through, from people who had already decided to move before lockdown began. But some people were moving because of their lockdown experience, he said.
“Behavioural shifts may be boosting activity, as people reassess their housing needs and preferences as a result of life in lockdown,” he said.
“Moreover, social distancing does not appear to be having as much of a chilling effect as we might have feared, at least at this stage.”
He said the upward trends look set to continue in the near term, and will be further boosted by the recently-announced stamp duty holiday.
But he added a note of caution. “Most forecasters expect labour market conditions to weaken significantly in the quarters ahead as a result of the after effects 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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, also warned that the future may not be so positive for the housing market.
“Lenders remain keen to lend but also cautious as to borrowers’ financial positions, given the impending end of the furlough scheme and a number of redundancies which have already been announced,” he said.
Anna Clare Harper, author of Strategic Property Investing, warned: “What no one can forecast is what happens next, with some nerves among homeowners, investors and economists as to what the future may hold.”
Jonathan Hopper, chief executive of Garrington Property Finders, said lockdown would have a lasting effect on the property market.
“Like so much else that has been transformed by the pandemic, the property market map is being redrawn as people reassess what they want from their homes and when, or even if, they need to travel to work,” he said.
“Three months of being cooped up in the same four walls has led many people to consider a move.”