The rise of 1.2 per cent was the highest since 1989, despite a fall of 0.5 per cent in December. The prices of new houses last month fell quite sharply by 2 per cent, resulting in a total fall for new houses over the year of 0.5 per cent.
Gary Marsh, head of research at the Halifax, said the society felt that sustained recovery in the housing market was on its way.
He said: 'We are very optimistic about the year. But obviously there will not be a return to the boom years.'
The Nationwide Building Society said on Tuesday that its research showed that house prices rose by 3.3 per cent last year and by 0.8 per cent in December. Mr Marsh puts the difference in the results down to the different sample sizes used by the societies.
The Halifax figures also showed that prices paid by first time buyers fell by 0.8 per cent in December, and revealed that the total rise for first time buyers over the year was 2.3 per cent.
The society believes that house prices will rise by 5 per cent this year and that the total volume of business in the UK will rise by 15 per cent to 1.4 million transactions.
It said that despite the fall in December, house prices became firmer in the last part of the year.Reuse content