Low borrowing rates, steady demand from buyers and a shortage of available homes continued to gently push house prices up across the UK in December, bucking the usual seasonal slowdown in the last month of the year.
House prices rose by 1.4 per cent - or £3,000 - in the final month of 2016, taking the average cost of buying a home to £220,000, according to the latest ONS and Land Registry House Price Index.
The report shows the rate of growth was weaker in the second half of the year, following the changes to stamp duty in April and June's Brexit vote. However, house prices were up by 7.2 per cent in the year to December, a slight increase on the November rise.
In London, average prices have hit £483,000, despite the pace of growth in the capital lagging behind the rest of the country for the first time.
Rob Weaver, director of investments at Property Partner, says: “Despite an impressive 1.8 per cent uptick in London in December, the rate of property price growth has been softening, with the capital underperforming the national average for the first time since the financial crisis of 2008."
Average UK house price: December 2016 (ONS/Land Registry)
“While prime central London has hit something of a wall, outer London boroughs are still recording double-digit price growth."
The East of England was the top-performing UK region over the past year, with double-digit growth outstripping London by almost four percentage points.
Average prices in the region, which takes in Luton, Chelmsford, Cambridge and Bedford, rose by 11.3 per cent over the year to reach £280,000.
“The continuing rise in house prices these figures highlight defines the current crisis in the housing market," says Jeremy Duncombe, director of the Legal & General Mortgage Club. "Whereas, traditionally, the last month of the year would see a fall in activity as buyers focus on the festivities, today’s statistics confirm that demand held strong in December.
"With mortgage providers continuing to keep rates low, this is a trend that will likely continue in 2017, particularly as the Government’s measures on housing will take time to affect the market."