London to Continue Leading U.K. Home Value Gains

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U.K. home values increased in December and are expected to continue growing in 2014, according to Hometrack Ltd.

Home prices across England and Wales increased 0.5 percent from December, the researcher found. In 2013, prices grew 4.4 percent, recovering from a 0.3 percent drop last year, Bloomberg reports. 

London's home value growth has been outpacing the rest of the U.K., with the pattern continuing in December. London registered the highest growth, increasing 9.1 percent from November, followed by the southeast, with a five percent gain. 

Prices in northern England fell by 0.5 percent, according to Hometrack. 

"The strongest market conditions and impetus for price inflation is set to remain focused on southern England," Hometrack said in a statement. "A broader-based recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes." 

A mismatch between supply and demand helped to increase values this year, a pattern that will continue next year, Hometrack reports. The government's Help to Buy program has also helped the market, as it's aimed at helping homebuyers with small down payments. 

Demand for property increased 25 percent this year, the fastest in three years, Hometrack said, while home supply increased by six percent, the slowest pace in 12 years. 

Last week, Knight Frank found London home prices ended 7.5 percent higher than last year, although with disparity throughout the city. In an effort to rapidly growing market, Chancellor of the Exchequer George Osborne announced in early December Britain's plan to impose a capital gains tax on home sales made by non-resident investors beginning in April 2015.