The final results for the housing market's performance in 2013 are not yet in, but according to Nationwide Building Society, prices rose by an average 6.5% in the 12 months leading to November 2012, to reach an average house price of £174,566.
Robert Gardner, Nationwide's chief economist, says this marks the "strongest pace" of increase since July 2010, but prices are still 6% lower than they were at the peak of the market in late 2007.
"Activity in the housing market has picked up strongly in recent months," says Gardner. "The number of mortgage approvals for house purchase reached 66,735 in September, 34% higher than the same period of 2012. A large part of the improvement can be attributed to further improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers."
Of course, while the UK average has shown a rise, the price changes over the past year have varied significantly from one region to the next. In its latest regional house prices report, Lloyds Banking Group said prices in London had increased by 9%, while in the South East prices had gone up by 7%.
So what will 2014 hold for the property market? David Hollingworth of mortgage broker London & Country thinks the general upward trend is set to continue: "The housing market has been showing real signs of picking up as the year has gone on and few expect that to change into 2014. Improved mortgage availability and competition in the market has seen record lows in mortgage rates, which has certainly helped boost confidence."
Indeed, the Royal Institution of Chartered Surveyors (RICS) has predicted prices will continue to increase in the new year, with 59% more chartered surveyors across the country predicting prices will increase rather than fall in the next three months – the largest proportion to say so since September 1999, thanks largely to limited supply and increase in demand for housing.
Property website Rightmove is also predicting an increase in house prices in 2014, potentially by as much as 8% which would push the average price through the 3% stamp duty threshold, based on the average asking price on Rightmove.
Average asking prices reached £241,455, so an increase would shift asking prices into the £250,000 to £300,000 stamp duty bracket, the Telegraph reports. This stamp duty "barrier" could in fact hold prices back, with buyer reluctant to put in higher offers and push up the overall cost of buying a property.
Nonetheless, the Bank of England is keeping a close eye on the housing market's temperature. Spencer Dale, chief economist at the Bank of England, said that "the UK housing market has a ... microwave type quality to it, with a tendency to turn from lukewarm to scalding hot in a matter of a few economic seconds".
Householders currently facing negative equity have already had their fingers burned, and an increase in prices could be helpful for them. But, according to the Building Societies Association (BSA), many consumers are also concerned about the prospect of rising interest rates. With the Bank of England base rate still low at 0.5% and mortgage rates currently low (at around 3.69% on average), mortgage repayments have been kept down. But if the Bank of England increases rates, and mortgage lenders follow suit, many homeowners could face a struggle to meet rising payments.
According to the Property Tracker survey, published by the Building Societies Association (BSA), just over a quarter (27%) of consumers responding to the survey said they believed that a rise in interest rates was the biggest risk to the UK housing market in 2014. Paul Broadhead, head of mortgage policy at the BSA, said: "It is understandable that consumers are wary about a rise in interest rates in 2014, but unless the pace of economic recovery picks up considerably, it is unlikely we will see the bank base rate rise over the coming twelve months, and when interest rates do rise, it is likely to be gradual."