Three-quarters of postcodes ended the year with higher prices than at the start, according to Hometrack.
It said that resurgent demand and dwindling supply were the defining themes of the housing market in 2013.
Demand for housing grew at its fastest rate for three years rising by 25% over the year while the supply of homes for sale increased by just 6%, the lowest on record, as rising sales volumes eroded stock levels.
Not surprisingly, London and the South East registered the highest growth in 2013, up 9.1% and 5% respectively. All other regions registered below average growth with prices in the North falling by 0.5% over 2013.
Hometrack said that the outlook for the market in 2014 was dependent on three key factors:
1 Whether the increase in demand can be sustained;
2 Whether the strength of growth in the London market can be sustained; and
3 The outlook for mortgage rates.
Hometrack said: "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."