The monthly change from January to February shows an increase of 0.7%. Repossession volumes decreased by 24% in December 2013 to 966 compared with 1,278 in December 2012.
The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with a movement of 13.8% - Wales experienced the greatest monthly rise with a movement of 1.6%.
The North East experienced the only annual price fall of 1.3%, and also saw the most significant monthly price fall with a movement of -1.4%.
The most up-to-date figures available show that during December 2013 the number of completed house sales in England & Wales increased by 33% to 75,182 compared with 56,697 in December 2012.
The number of properties sold in England and Wales for over £1 million in December 2013 increased by 44% to 898 from 624 in December 2012.
Wales is the only region with an increase in repossession sales in December 2013 (up 6%).
Nicholas Ayre, managing director of homebuying agency Home Fusion, says:
"The gulf in property prices across the UK grows ever bigger with London house prices hitting a new all-time high in February, up 13.8% in a year. Transaction volumes are rising but are still some way off the peak of the market and the lack of supply is helping fuel soaring house prices in parts of the country. There are growing fears that if we are not in bubble territory yet it won't be long before we are, with the Bank of England raising the alarm about borrowers over-extending themselves.
"The problem mortgage borrowers have is that they are competing against cash buyers who don't have the same affordability constraints. Governor Mark Carney has commented that he can't control house prices because he has no sway over those cash buyers who aren't affected by interest rate rises. While buyers from overseas are playing a part, it is not just international purchasers who are in the fortunate position of buying for cash: many of my clients who do so are from the UK, and are downsizing from larger homes.
"Lenders are stricter and the bad old days where it was possible to borrow up to seven times income are long gone. However, borrowers still need to do a reality check and consider whether they could afford the mortgage if there was a 1% rise in interest rates - or more. If not, it's important to be realistic and rein in the borrowing.
"Supply constraints are not going to be resolved anytime soon. The government has made the right noises about building more homes but this takes time. In the meantime, prices are likely to rise higher and we could well find that the illusory bubble becomes a dangerous reality."
Martin Stewart, director of independent mortgage broker, London Money, said:
“House prices in London have detached from reality. The first time buyers who do get onto the ladder here are almost always the ones who have borrowed from the Bank of Mum and Dad. It’s still possible to buy in the capital if you look to the few areas that have yet to ‘come up’, and have got your mortgage ready, but it’s getting harder and harder.
“Wealthy overseas buyers continue to use Prime London properties as a hedge for their capital and this is driving prices up and cutting many aspiring Londoners, or London residents, out. The tidal wave created from this foreign influx of capital is now reaching out to the commuter belt. Many young people have no chance whatsoever of ever getting onto the ladder in London and are being priced out even before they arrive for the dreaded open day.”
