Population surge will add to house price pressure "With the consciousness of the nation so closely linked to the fortunes of the housing market expectations of future price rises are fully entrenched," said Adam Challis, head of residential research at Jones Lang LaSalle. For the first time in six years, house prices are increasing in every region of the UK. Incredibly those same headlines that only a year ago we're describing the fifth straight year of broadly flat prices - falling in real terms - are now likely to highlight concerns of the market overheating. The average house price across the UK will exceed the £250'000 mark in 2014 but in reality this number has been boosted by a feverish London market. "Price increases are unequal across the UK, with perennial strength of economies in London and South East England outpacing the rest of the country'" said Mr Challis. Underpinning demand, this has helped the already yawning north / south divide to widen further. According to real estate advisers Savills, London property prices for October 2013 were 11.4pc higher than pre-credit crunch norms, whereas the cost of an average home in the North East has plummeted 25.5pc over that six year period. The best performing borough in the UK, judged by price growth for 2013 up to October was London's Lambeth which saw an increase of 13.1pc, followed by Fulham and Hammersmith (12.4pc) and Wandsworth (12.3pc). Conversely, Hartlepool saw the biggest dip as prices fell 8.6pc over the period. Research from Savills's head of residential research, Lucian Cook, also showed that the London borough of Hackney was the most buoyant market in Britain this year with transaction levels only 13pc lower than those during the 2007 housing boom, and the average sale price at £414,402. Whereas transaction levels in Burnley, Lancashire, were 74pc lower. Generally very few expected sentiment to turn as significantly as it did in 2013. Partly that is because the debate around Help to Buy re-awakened people's aspirations to get on to or trade up the property ladder at a time when economic outlook was improving," said Mr Cook. Yet the market is still dependent on equity rich buyers. Transaction levels and newly granted mortgages have both increased but both remain well below a fully functioning market. Analysis has shown that every £22 out of every £100 of equity in the UK housing music over the past year was spent in London. Therefore of the total £146bn of equity applied to buying in the UK, £33bn was spent in the Capital. Prime (the top five to 10pc of the market) property price growth in South West London has been driven by the amount of equity householders have been sitting on during the downturn, mostly stockpiles of bonuses banked by City workers prior to the financial meltdown of 2008. Price growth in South West London has overshadowed that of Prime Central London for the first time. Transactions in the affluent areas of Belgravia, Chelsea and Kensington, Knightsbridge and Mayfair were dominated by wealthy overseas investors this year, with a penchant for buying blocks of superflats for buy to let or as a foothold in the Capital to shop, do business and to accommodate student children. However, experts fear that a new capital gains tax to be applied to the sale of homes owned by overseas investors may deter much capital flows from entering the country at a time when recovery is fragile. Jones Lang La Salle has predicted that £5bn in new London's build property is expected to be sold to foreign buyers in 2014. In addition to this extra tax burden on overseas home owners, it is widely expected that the average house price will burst through the £250,000 3pc stamp duty threshold which could dampen activity in the mainstream market next year. However, a greater threat to the housing market recovery is a countrywide lack of supply, driving up purchase prices and rental costs. London's population is expected to grow by one million people over the next decade and the unresponsiveness of supply against this backdrop will continue to drive affordability ratios that appear unsustainable in the long-term. "This could increasingly become a problem for the Capital's economy of companies find it difficult to recruit and retain younger employees who struggle with housing costs," said Mr Challis. We expect ongoing pressure to reform the planning system to attempt more radical solutions such as the generation of new towns. Albeit likely to be delayed until after the 2015 election. The Labour leader Ed Milliband attacked housebuilders Berkeley Homes, Taylor Wimpey, Persimmon and Barratt Homes earlier this month for land banking and profiteering - sitting on land until is its value increases. However, the big four construction companies hit back at Government appealing for the release of more state-owned land and a freer planning environment to enable them to build the 240,000 homes needed a year. Currently levels are stuck around the 125,000 mark. Government intervention will continue to represent the greatest risk and support for the housing market in 2014. As we have seen recently with the withdrawal of Funding for Lending for mortgages and planned changes to capital gains tax for foreign investors, policy moves can surprise - with positive and negative consequences," said Mr Challis. He continued that in a pre-election year, the politicisation of the housing market is only likely to continue. Quirks of the market in 2013 have included the move of London families from prime Central London and it's surrounding boroughs. out into the commuter belt of Surrey, Kent and Hertfordshire, to buy more space as foreign investors push up prices in town. Another trait has been the downsizing of equity-rich grandparents to get their children and grandchildren on the property ladder as rising costs threaten to price out young professionals. Increased activity over the last year was reflected by a hiring boom among the UK estate agents, in what has been a "bumper" year for the industry, said Russell Quirk, founder of digital disrupter eMoov. There are now several online estate agents competing with the traditional bricks and mortar model. New companies like eMoov, which charges £395 plus vat per sale, have only one central office and use the popular portals Rightmove and Zoopla to advertise property. While major property agent Countrywide saw an increase of 13pc in like-for-like sales in 2013, and Connells, with a 485 branch network, enjoyed a rise of 16.7pc, eMoov enjoyed a 40.6pc hike in revenues. "Estate agents are certainly benefitting from additional transaction levels with the major chains' performance broadly according with the number of UK transactions overall," said Mr Quirk. However we're still some way from the 1.7m sales of 2007. And mortgage figures support Mr Quirk's view. Despite the noise around the Government's shared equity scheme Help to Buy, loans for house purchase across the UK for the first ten months of 2013 are still 44pc lower than in 2007, quelling fears that the housing market may overheat in the next 12 months.