House prices in the final three months of 2013 were also 1.9% higher than in the previous three months.
Commenting, Martin Ellis, housing economist, said:
"House prices in the final three months of 2013 were 1.9% higher than in the previous three months. This was within the narrow range of 1.8-2.1% for this measure recorded in each of the preceding six months. The annual rate of price increase fell slightly compared with last month with prices in the three months to December 7.5% higher than in the same three months last year."
"Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months. This will increase the likelihood that more people will consider buying a property in 2014, therefore supporting housing demand.
"Nonetheless, continuing pressures on household finances, as earnings again fail to keep pace with consumer price inflation, are expected to constrain demand. The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply. Indeed, our consumer confidence research shows that there has been a significant improvement in sentiment towards selling in recent months. These factors should help to curb the upward pressure on prices."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"2013 was a cracking 12 months for the housing market, which few had accurately forecast at the start of the year and 2014 has continued in the same vein. Mortgage brokers and estate agents have got off to an incredibly busy start as many buyers view this as the year when they will finally get on the housing ladder, or move up it.
"Rising property prices are fuelling fears among some buyers that if they don’t act now, they will be priced out further, while falling unemployment has also raised concerns that interest rates will rise sooner rather than later.
"But there is no need to panic. It is still highly unlikely that interest rates will rise in 2014, despite unemployment falling faster than predicted and the economy recovering at a quicker rate. We are still very much in recovery mode and it’s unlikely that the Bank of England will risk raising interest rates too soon.
"Lenders are keen to have a strong first quarter and continue to offer some extremely attractive mortgage rates. With the Mortgage Market Review set to be introduced at the end of April, this will likely lead to a slowdown in lending as lenders get to grip with the changes they need to introduce. Lenders are therefore trying to get ahead of the game so now is a good time to secure a competitive deal."
