The price growth comes after a 0.3% drop in 2012 and last month there was a 0.5% rise, the 11th continuous monthly rise, according to the data from Hometrack.
This growth is set to continue as demand from aspiring home buyers increases amid a lack of supply of homes on the market, says the property firm.
But the growth has been sporadic. For example, London and the South East registered the strongest gains across 2013, with prices up 9.1% and 5% respectively while prices in the North fell by 0.5%.
‘Overall we expect the momentum in house price growth to spill over into 2014 supported by a continued lack of supply and rising demand. The strongest market conditions and impetus for price inflation is set to remain focused on southern England in 2014. A broader based recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes,’ said Richard Donnell, director of research at Hometrack.
He also pointed out that the market is supported by the government’s Help to Buy programme which is aimed at helping home buyers with small deposits and this will continue in 2014.
In 2013, demand rose 25%, the fastest in three years, while the supply of homes for sale increased 6%, the slowest pace in the 12 years Hometrack has been recording the data.
Property website home.co.uk also predicts that it will be price in London and the English Home Counties that will continue to outpace the rest of the UK this year. Using key data and trends from its Home Asking Price Index, analysts have compiled a set of regional price forecasts, predicting the potential winners and losers in 2014.
It also predicts that marketing times will decline further as demand increases across the country and supply will continue to contract, especially in London and the South East.
Price rises in the North West, Yorkshire, Wales, Scotland and the North East will remain behind the rate of inflation and the buy to let sector will continue to grow considerably despite falling yields, it also predicts.
'This year will be another good year for UK property prices and increased confidence will no doubt produce extraordinary price rises in some areas,' said Doug Shephard, director at home.co.uk.
'The considerable regional disparities that exist will continue to play out and may well be exaggerated further by the government's blanket implementation of the Help to Buy scheme. We expect the imbalance of supply and demand to worsen considerably in the high demand areas thereby driving prices even higher,' he added.
