The average UK property price jumped to £252,000 in December as the housing market continued its surge during the pandemic.
Official data showed average prices rose 8.5 per cent in the year as buyers sought to take advantage of a stamp duty holiday and trade up to larger homes.
The annual growth rate was the fastest since October 2014 with detached properties seeing a 10 per cent rise in sale prices – double the increase for flats.
London registered the lowest annual increase at 3.5 per cent with Wales seeing the largest rise of 11.2 per cent.
The capital remains the most expensive region, however, with an average price of £496,000
The Office for National Statistics said: "Recent price increases may reflect a range of factors, including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations."
Rishi Sunak is under pressure to extend the stamp duty holiday for properties valued up to £500,000 beyond its current end on 31 March to prop up house prices.
Surging valuations will add to reasons for scrapping the tax break which disproportionately benefits well-off households.
The policy applies to England and Northern Ireland although Scotland and Wales have implemented similar property tax holidays.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Evidence already is accumulating that prices will fall back this year.
“Prices surged in the second half of last year in response to the boost from the temporary increase in the threshold for stamp duty, and strong demand from households seeking larger properties due to the pandemic.
“Note that prices for detached properties rose by 10 per cent year over year in December, double the 5 per cent increase for flats.
“But timelier data suggests that the official measure of prices, based on transactions, will dip when the threshold for stamp duty returns to £125,000 at the end of March, from £500,000 at present.”
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