House prices in England and Wales jumped 2.5% from January to December, the largest monthly rise since 2002, new figures show.
Demand and prices has been boosted by the supply shortage of properties as well as well as the rush by investors to beat the stamp duty deadline on 1 April.
According to the latest data from the Land Registry, house prices have risen by 7.1% (£12,736) in the last year to £191,812.
The most significant price increase was in Reading, where prices rose 16.1% to £270,146. London saw a movement in prices of 13.9% over the past year to £530,409. The smallest price increase was in the North East at 0.2%.
Jeremy Leaf, a former RICS chairman and north London estate agent, said prices were rising in Reading because of its commutability.
He said: “Buyers are finding better value than in London although if property prices continue to rise at the same pace that may no longer be true. With trains taking only half an hour into Paddington, you can get there faster from Reading than the suburbs, while living in parts of Berkshire will mean a reasonable quality of life.”
The number of property transactions has decreased over the last year. In the three months to November 2014 there was an average of 81,656 sales per month, compared to a figure of 78,652 for the same period in 2015.
Leaf said: “The decline in number of property transactions continues to be a worry. If people aren’t able to move in and out of the market when they want to, there will be an inevitable knock-on effect for the rest of the economy. With the high cost of moving, continued shortage of supply and affordability issues with tougher mortgage criteria, this situation looks unlikely to change any time soon.”
Experts have warned that the forthcoming EU referendum is likely to lead to buyers holding off from purchasing a property until after the vote.
Nick Leeming, chairman at Jackson-Stops & Staff, said there will likely be short-term interruption to the property market as we approach spring.
Leeming said: “The usual spring buying season may be temporarily interrupted by this uncertainty but the influencers that have kept the market strong – a shortage of housing stock, interest rates destined to stay low according to the Bank of England and very competitive mortgage rates – will still be in place come June. There is no reason to suspect the market will suffer any long-term decline.
“The market will also be eagerly awaiting the outcome of the Budget announcement in mid-March to see what impact, if any, it has on issues such as stamp duty, buy-to-let investment and the chronic shortage of new homes.”
