The data from UK lender the Halifax, also shows that year on year prices have risen by 9.5% and were up 1.6% quarter on quarter, taking the average price to £208,286.
However, the quarterly rate of change remained below 2% for the second successive month and was at its lowest values during 2015. But the annual rate of change remained in the 8% to 10% range throughout the year.
The Halifax report also points out that the monthly house price pattern seen during the second half of 2015 has fluctuated and the quarter on quarter change is a more reliable indicator of the underlying trend.
Newham in London recorded the biggest rise in house prices among major UK towns and cities over the past year, according to separate recent research by the Halifax. The average house price in the London borough was 22% higher than in the previous year and nearly double the 12% increase in London as a whole.
Those areas that have seen the biggest house price increases over the past year are either in outer London or within close commuting distance of the capital.
‘There remains, however, a substantial gap between demand and supply with the latest figures showing a further decline in the number of properties available for sale,’ said Martin Ellis, Halifax housing economist.
‘This situation is unlikely to change significantly in the short-term, resulting in continuing upward pressure on prices,’ he added.
According to Rob Weaver, director of Investments at property crowdfunding platform Property Partner, the fact that house price growth was 1.7% in the traditionally quiet month of December underlines the upward pressure on prices caused by the supply and demand imbalance.
‘With such extreme supply side issues, prices look set to move in only one direction throughout 2016. December may well have set a precedent for the year ahead. There will naturally be regional variations throughout the year but overall the trajectory of the UK property market will be upwards,’ he said.
‘As ever, London and the South East are likely to outperform due to the exaggerated supply issue and overall demographic in that corner of the country. The significant house price growth seen in Newham reinforces how the balance of power in the capital has moved from the centre to the peripheries, where gentrification, regeneration and infrastructure improvements are driving price rises,’ he explained.
Jonathan Hopper, managing director of Garrington Property Finders, said that overall 2015 ended much as it began with demand outstripping supply in many areas and the resulting tension driving up prices.
But he also pointed out that the start of 2015 was hampered by caution as some sectors of the market paused to see what would happened with the general election, for example, but there are no such reservations this January. ‘With interest rates set to stay low for some time and buyer confidence strong, demand continues to surge. By contrast the squeeze on supply is getting worse with new instructions falling for the tenth month in a row in November,’ he explained.
‘While the Halifax data confirms that in 2015 prices rose fastest in London or within commuting distance of the capital, early activity in 2016 suggests that demand elsewhere is picking up considerable momentum. The South East does not have the monopoly on low supply and as demand becomes broader based, so too should price rises,’ he added.
The 1.7% rise in December drives homes the extent of the demand from buyers, according to Mark Posniak, managing director of Dragonfly Property Finance.
‘In the current environment, seasonal trends are arguably becoming less significant. "Looking into 2016, it's hard to see anything other than a continuation of the current trend of steadily rising prices, especially with interest rate rises in the near future unlikely,’ he said.
‘The jobs market is strong, consumers are confident and mortgage rates remain very low. Against this backdrop, further price rises are almost inevitable,’ he added.
