UK house prices increased by 10.8% on an annual basis in December 2021, government figures show.

This takes the average property across the UK price up to £274,172.

In England, the data adds, a 10.7% annual rise left the average house price at £293,339 and, in Wales, a 13% annual rise took the average house price to £204,835.

Meanwhile, in London, the average property price rose 5.5% on the year, which means the average home in the capital now costs £521,146.

On a monthly basis, house prices in the UK increased by 1.1%.

North London estate agent and former Rics residential chairman Jeremy Leaf says: “On the face of it, these figures show the housing market continuing its inexorable rise but maybe that isn’t the case.

“Looking behind the numbers we see prices, though a little historic, are virtually unchanged from the previous month. Buyers are coming to terms with reduced affordability, which is compromising confidence to take on yet more debt as inflation hits record highs and interest rates are on the up too.

“At the sharp end, we are still finding lack of stock is holding back transactions but increasing energy costs in particular are starting to encourage potential downsizers to think more seriously about the long-term suitability of their present homes, which should help to balance out supply and demand.”

And Assetz Group chief executive Stuart Law adds: “House prices are still on the rise while wages fail to keep pace with inflation. This is a dangerous dynamic for the market and particularly worrying for low income and first-time buyers.”

He continues: “I expect interest rate growth to be cautious this year despite inflationary pressures, allowing low-cost mortgages to fuel market activity. But this can’t continue indefinitely.

“If current dynamics persist, we will see more and more people locked out of the housing market unless we urgently tackle chronic undersupply.”

The Bearded Mortgage Broker founder Ian Hewett says: “Over the past year I’ve watched endless borrowers scrimp and save to achieve the magical 5% deposit required to buy a shoe box, only to then see the prices of property being driven higher and higher.

“The lack of stock is borderline cruel… the look of anguish and annoyance as first-time buyers realise they don’t have enough of a deposit to reach their dream of owning a home is hard to bear.

“To top it all off, interest rates are now rising and the cost of living is having a real impact on lenders’ affordability criteria.

“The market is incredibly tough at the moment for first-time buyers and is driving many into an existential despair.”