Used car values rose 3.7% in August, marking the sixth month running of increases.

Vehicle prices have increased, on average, by more than a fifth of their value in less than six months

The data from Cap HPI’s daily produced Live trade values show an increase of almost £500 per car at the three-year point last month.

Whilst Cap said the rise on its own would be “quite extraordinary”, it comes on the back of value increases since car showrooms reopened in April.

Values have now risen by an unprecedented 20.3% in five months, and the market has now seen six continual monthly increases. Vehicle prices have increased, on average, by more than a fifth of their value in less than six months.

Furthermore the rise comes over the summer period – ordinarily, values would potentially have depreciated by 5% during this time so a valuation swing of over 25% has occurred.

Derren Martin, head of valuations at Cap HPI, said: “Foreign holidays have taken a back seat to Covid concerns and whilst many UK residents have gone on holiday, they’re taking shorter breaks and more have opted for the ‘staycation’, which may even involve accessing the internet and seeking out purchases in a way they would not normally have done while relaxing on holiday.”

Looking at individual segments, the lower medium, or C-sector, has increased by the most in percentage terms, up by 4.6% or £525 on average at the three-year, 60k-mile point.

The MPV sector was the next biggest mover, increasing by an average of 4.5% or £560 as dealers see them as value for money in the expectation that consumers are looking for larger, family-friendly vehicles with staycations and road travel in mind.

Conversion rates are also up in the wholesale sector due to a variety of reasons.

Looking ahead, Cap warned that September will be challenging for the new car market.

“There will be fewer part-exchanges and fleet returns coming, meaning supply will stay constrained compared with previous plate-change months,” Martin said. “I expect demand to remain at current levels, possibly even increasing, as more consumers decide to seek out a used car rather than wait for a new car that could be some months away from delivery.

“It is likely that values will continue to increase through September, although we forecast this increase won’t be as large as in some previous months.”