Average house price increases to £120,685

The Nationwide figures also show UK house prices rose by 0.2% in December while annual house price growth slowed for the fourth month in a row to 7.2% from 8.5% in November

House prices increased by 7.2% over the course of 2014, after rising by 8.4% in 2013.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “The pace of annual house price growth continued to soften as 2014 drew to a close, slowing from 8.5% in November to 7.2% in December.

“This marks the fourth consecutive month in which annual growth has moderated, despite house prices increasing by 0.2% month on month in December. The 7.2% increase recorded over the year as a whole, is modestly lower than the 8.4% gain recorded in 2013.

“While cooling in the London market is a part of the story, this is not the main explanation for the slowdown evident in the UK figures in recent months. Indeed, annual price growth in the capital continued to outpace every other region in the UK, at 17.8% in Q4. Overall, 12 of the 13 UK regions saw the pace of annual price growth slow.

“In many respects the regional pattern prevailing in 2013 remains in evidence, with the South of England recording significantly stronger rates of house price growth than Wales, Scotland and the North of England.

“While the pace of house price growth has moderated in recent months, activity has slowed more sharply, with the number of mortgages approved for house purchase falling to their lowest level for 16 months in October (and 22% below the level prevailing at the start of the year).”