House prices ended the year with strong growth of 0.8 per cent in the month of December according to the building society Nationwide.
This took the average value of property in the UK is now £196,999, up 4.5 per cent compared with a year ago. London remained the strongest performing region for the fifth year running, with average prices up 12 per cent in 12 months.
London’s average values are now 50 per cent above their pre-crisis peak in 2007 - a sharp contrast to, say, Northern Ireland which remains 44 per cent below its pre-crisis peak, despite rising by 6.5 per cent in the last three months of the year.
But the capital will not be such a success in 2016 because of widespread unaffordability across boroughs, says the building society.
UK-wide, prices are around 7.0 per cent higher than a year ago with Scotland the only part that saw a fall, with values down 1.9 per cent in the three months to the end of December compared with the same period a year ago.
"Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually. However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability" according to Robert Gardner, Nationwide's chief economist.
On Twitter, Howard Archer - chief UK and European economist at IHS Global Insight - says the Nationwide figures back up his firm’s forecast house price growth of 6.0 per cent in 2016.
Meanwhile Jeremy Leaf, former RICS chairman and north London estate agent, says: ‘Supply is simply not increasing fast enough to keep house prices in check and is making it harder for first-time buyers to get on the ladder. The situation is likely to get worse before it gets better in view of the build up to the increase in stamp duty in April, particularly as these [Nationwide] figures are a little historic.”