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House price jump biggest since 2010
House prices surged by 8.4% over 2013 across the UK as the market revival became increasingly broad-based, Nationwide has reported.
Prices rose by 1.4% month-on-month in December to reach £175,826 on average, although they remain around 5% below all-time highs recorded in late 2007, the building society said.
The annual increase in prices across the country is the biggest jump seen since June 2010. Every region across the UK saw prices increase year-on-year, ranging from a 14.9% annual increase in London to a 1.9% uplift in the North.
Among the major towns and cities, Manchester was named by the study as the best-performing area for house price rises in 2013, with prices there up by 21% typically over the last year to reach £209,627 typically.
Carlisle was named as the worst performer, with a 1% annual increase in prices taking the average value of a home there to £136,128.
Prices in London are now 14% above their annual peak, with the price of the typical home in the English capital having reached £345,186.
House prices in Northern Ireland are still around half their 2007 levels, although they have climbed by 7.0% year-on-year to reach £111,612 on average. London has the most expensive house prices in the UK while Northern Ireland has the cheapest, according to Nationwide's figures.
Scotland recorded a 3.7% annual increase in house prices, pushing them to £136,729 typically, while Wales saw prices pick up by 6.1% over the same period, taking the average price there to £139,722.
In England, prices have increased by 8.6% year-on-year to £205,084 typically.
Yesterday, Prime Minister David Cameron dismissed fears that the Government is pumping up a housing bubble as he hailed the success of its flagship Help to Buy scheme. A new phase of Help to Buy was launched in October to offer state-backed mortgages to credit-worthy people struggling to get onto the property ladder or move up it because they only have a small deposit saved up.
The Prime Minister branded sceptics of the mortgage guarantees - such as Liberal Democrat business secretary Vince Cable - "London-centric".
In many parts of the country prices were "barely moving at all", he insisted.
More than 6,000 people have put offers in on homes and applied for mortgages using Help to Buy since it was launched about three months ago.
Nearly 750 homeowners have completed their purchases and hundreds were able to spend Christmas in their new homes, according to the Government.
Robert Gardner, Nationwide's chief economist, said the upturn in prices has become "increasingly broad-based over the course of 2013".
He said: "For the second successive quarter, all 13 UK regions saw positive annual house price growth in quarter four...
"Part of the reason for the acceleration in house price growth is that the supply side of the market has not kept pace with the upturn in demand, even though buyer numbers remain subdued by historic standards.
"For example, in quarter three 2013 the number of housing transactions in England was around 25% below pre-crisis levels, while the number of new homes built was around 45% lower."
Mr Gardner said that current ultra-low interest rates are currently helping to keep home loans relatively affordable, with the typical mortgage payment for a first-time buyer equating to around 29% of their take-home pay.
But he added: "However, the risk is that if demand continues to run ahead of supply in the quarters ahead, affordability may become stretched.
"House price growth has been outstripping average earnings growth since the start of the year."