Annual house price growth for December rose to 4.5% according to Nationwide, following a 0.8% monthly increase in property prices from November.

This puts the average UK house price at the end of this year at £196,999.

Robert Gardner, Nationwide’s chief economist, said: “UK house prices increased by 0.8% in December, with the annual pace of house price growth picking up to 4.5%, from 3.7% in November.

“Prices in the South of England, and especially in London, have been outpacing the rest of the UK by a wide margin. Indeed, prices in the South of England are now well above their pre-crisis levels while they remain below in Scotland, Wales and large parts of the North of England.

“After moderating during the first six months of 2015, house price growth remained in a narrow range between 3% and 4.5% in the second half of the year. This is broadly in line with earnings growth and close to the pace we would expect to prevail over the longer term.”

Regional picture

Regional house price performance was mixed in the fourth quarter of the year. Five UK regions recorded a slowdown in the annual rate of growth, while seven saw acceleration. Most parts of the country continued to see annual house price gains, except Scotland which recorded a small decline.

London was the strongest performing region for the fifth year running, with average prices up 12% year-on-year. Yorkshire and Humberside was the weakest performing English region, with prices up 0.4% year-on-year.

Price growth in the South exceeded that in the North for the 27^th consecutive quarter. Prices in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) were up 8.9% year-on-year, whilst in Northern England (West Midlands, East Midlands, Yorkshire & Humberside, North West and North) prices rose by just 1.6%.

In cash terms, the gap in average prices between the South and the North of England widened further and now stands at nearly £159,000, around £23,000 higher than a year ago.

Mark Posniak, managing director of Dragonfly Property Finance, said: “The seemingly eternal imbalance between supply and demand will almost certainly keep house prices rising next year, if only at a moderate pace.

“For the price gap between the North and South of England to have widened by £23,000 shows the divide remains as strong as ever.”