House price growth reached 6.4% in the year to December 2015 with London and the East of England leading the way.
Today’s Land Registry data revealed that for the whole of England and Wales the average house price stood at £188,270, while in London it reached £514,097.
Prices rose by 12.4% in London and 10.6% in the East, while at the other end of the spectrum prices increased by just 3.8% in Yorkshire and the Humber.
Stephen Smith, director of Legal & General Housing Partnerships, said: “The shortage of housing supply is confirmed as house prices continued their relentless climb over the New Year.
“The gulf between supply and demand is continuing to drive up competition for homes, pushing up asking prices. The shortage of housing is prevent existing homeowners from moving due to a lack of suitable alternatives, whilst wage-growth-beating house price inflation is pushing many first-time-buyers out the market altogether.
“This lack of housing supply must be addressed before the situation is allowed to deteriorate further. In order to meet demand, the government should help existing homeowners to rightsize by committing to building 250,000 homes per year. This will, in turn, create a more fluid housing market and encourage more efficient use of current housing stock.”
On a monthly basis the biggest house price increases were in London (2.1%), the East (1.7%) and Yorkshire and the Humber.
Mark Posniak, managing director at Dragonfly Property Finance, said: “With demand strong and supply so weak, prices in December defied the usual seasonal slowdown.
“The supply/demand imbalance is especially pronounced in the capital and this is highlighted by price growth of 2.1% in just one month.
“As the Nationwide highlighted earlier this week, the construction lag is having a significant impact on the market.
“On a more positive note, we are seeing noticeably more construction activity at the moment, particularly by smaller developers. But this will take time to trickle through into the market.
“Looking into 2016, it’s hard to see anything other than a continuation of the current trend of steadily rising prices, especially with interest rates unlikely to rise in the near future and a robust jobs market.”