The UK housing market continued to show signs of recovery last month - but annual price growth for 2005 was the lowest for ten yearsr.
The Halifax yesterday said house prices rose by one per cent during December, but despite the slight recovery the average cost of a property rose by just 5.1 per cent during 2005 - the lowest growth for ten years and well below the long-term annual average of eight per cent.
At the same time, prices rose by less than ten per cent in all nine English regions for the first time since 1998.
In London the annual rate of house price inflation rose to 6.7 per cent from 3.9 per cent. During the final quarter of the year, prices in the capital were 3.6 per cent higher than they had been during the same period of 2004.
Halifax said this was the second successive quarterly rise, and suggested the beginning of a recovery in the London market following the price falls seen between mid-2004 and early 2005.
The increased growth helped push the average cost of a property in the capital through the £250,000 barrier for the first time, to average £257,120.
Scotland saw the biggest annual rise in house prices during 2005 for the first time in 15 years as the North-South growth divide persisted for the third consecutive year.
Prices in Scotland rose by an average of 14.8 per cent in 2005, followed by Northern Ireland at 14.1 per cent and the North at 9.1 per cent.
Yorkshire and the Humber and the North-west both also recorded relatively strong gains of 8.4 per cent and 7.2 per cent respectively. But at the other end of the scale, prices fell by 1.9 per cent in the South-west and by one per cent in East Anglia - the first regional annual fall in prices since 2000.
The East and West Midlands both recorded growth of around two per cent, while in the South-east prices edged ahead by 2.7 per cent and in Wales they ended the year 5.6 per cent higher.
Martin Ellis, Halifax chief economist, said: "House prices increased by one per cent in December and by 2.1 per cent in the final quarter of 2005, confirming a modest recovery during the latter part of last year.
"This pick-up in prices is entirely consistent with the improvement noted by all the main indicators of housing market activity over recent months."
Mr Ellis added that August's interest rate cut, which had helped keep mort-gage repayments as a percentage of a new borrower's income close to their long-term average, combined with continued high employment had helped underpin the recent improvement in house prices.
But he said that another year of weak economic growth and the continued high level of house prices in relation to earnings should curb demand and prevent rises taking off.
Halifax is predicting the average cost of a property will rise by just three per cent during the coming 12 months from its current level of £171,632.
The Halifax data is the latest in a series of reports which suggest that the housing market has already achieved a soft landing and is starting to firm up, with a survey by rival mortgage lender Nationwide also showing faster house price growth.
Paul Smith, chief executive of Haart estate agents, said: "Halifax's figures represent what we have been reporting. We are seeing higher levels of activity, as confidence has started to return and buyers are realising that the market is not going to crash.
"We are expecting to see a flurry of activity, with applicant levels predicted to rise by over ten per cent in January, and we expect this to carry over to the first half of the year as 12 months' worth of pent-up activity is released."