Average house prices rose by 4% in 2019, the Halifax House Price Index has shown.
This was driven by a monthly gain of 1.7% in December which was the biggest monthly increase of 2019.
Russell Galley, managing director at Halifax, said: “Looking ahead, we expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes.
“Longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand.
“As a result, we expect a modest pace of gains to continue into next year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “The housing market surged in December, according to Halifax, with the biggest monthly increase in prices all year.
“Several factors were responsible – the Conservative victory in the General Election, finally giving them a mandate to get on with Brexit and lenders concentrating on year-end and offering cut-price deals.
“It also helped that buyers and sellers who have had enough of all the delays decided to just get on with their transactions.
“The signs are encouraging for 2020 with lenders keen to lend and plenty of money available to do so.
“It is a good time to be a borrower, less so a saver.”
Data from HMRC showed a 3.2% rise in residential transactions from October to November to reach 102,050, the highest figure since August 2017.
Transactions in November were approximately 1.9% higher than the same time in 2018.
Furthermore, Bank of England figures show that 64,994 mortgages were approved to finance house purchases in November, up 0.5% month-on-month and 1.4% year-on-year.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The Halifax house Price Index has proved to be a reliable indicator of property market activity over many years so is widely respected.
“On the back of the largest monthly increase for the year in November, prices are up even more in December on a monthly and annualised basis.
“But price rises are reflecting more of a shortage of stock at the moment than significant increases in demand and not widely in London where affordability is most stretched.
“On the ground, there is no doubt that the election and more certainty on Brexit is contributing to recovery in market confidence.
“Looking forward, we expect higher increases in values in areas where the ratio of house prices to earnings is lower.”
Josef Wasinski, co-founder of Wayhome, said that financial markets, including the housing market, benefitted from the ‘Boris bounce’ following last month’s election.
Wasinski added: “However, this rise in house prices will only be welcomed by those looking to sell as it pushes homeownership further away for those first-time buyers desperate to get out of the ‘rent-trap’.
“First-time buyers now need the support promised by the Conservative government during the election campaign.
“We need to see genuine change in the housing market which can provide credible, affordable routes to homeownership.”