British house prices rose by 1 per cent on the month in December to give a three-month annual increase of 5.1 per cent, HBOS said in its Halifax house price survey today.
The figures are the latest in a series of upbeat reports suggesting Britain's housing market has achieved a soft landing and is beginning to firm. But analysts said 2006 was unlikely to see strong rises in house prices..
Halifax, the nation's largest mortgage lender, said that the 5.1 per cent 2005 increase in house prices was the weakest yearly growth in a decade and well below the long-term average of 8 per cent.
Within that, all regions saw a slowdown in annual house price growth, except London, where prices increased by 6.7 per cent compared with 3.9 per cent growth in 2004.
Halifax said the Bank of England's August interest rate cut had helped to underpin the improvement in house prices. However, it said continued subdued economic growth in the UK coupled with high prices relative to incomes would curb house price growth this year. It expects house prices to rise by just 3 per cent in 2006.
"This pick up in prices is entirely consistent with the improvement noted by all the main indicators of housing market activity over recent months," said Halifax chief economist Martin Ellis.
In November, house prices grew by a downwardly revised increase of 1 per cent, with a 4.5 per cent rise in the three months on a year ago.