New Land Registry data shows a 0.8% monthly increase in property prices in England and Wales, with London seeing the biggest rise between November and December 2012.

The housing market showed signs of picking up towards the end of last year, with a 0.8% rise in house prices between November and December 2012 in England and Wales, according to figures just released by the Land Registry.

The increase took the average house price in England and Wales to £162,080, which marked a 1.7% year-on-year increase, with values rising at the fastest rate in two years.

London recorded the largest increase of all regions over the past 12 months with an 8.4% rise and the capital also posted the biggest monthly gain at 3.1%.

Charlie Willis, Head of Strutt & Parker's Knightsbridge office, explains how the Budget and tax implications affected these figures: "Last year, when the March 2012 Budget delivered a surprisingly uncertain and unclear mandate about UK property purchases and holdings, with the introduction of terms around "non-natural persons" and ARPT (annual residential property tax), it created a 9-month dilemma for many historically held properties by overseas families and investors in UK property. This led to a certain amount of inertia. In mid-December, clarity was provided in the Draft Finance Bill and an unleashing of pent-up demand saw a steady increase in the flow of sales of prime residential stock transacting."

Willis goes on to say: "There is still caution but there is activity for purchasers of the very best-in-class homes.  London remains under-supplied and there is the age-old adage that they don't make properties quickly enough for the demand, and there are only a small handful of new properties able to be built in the already densely and manicured golden postcodes.  Whilst global interest in owning prime London stock, be it commercial or residential, remains a draw for investors and families looking to own in these cherished postcodes, increase in activity if the stock is available is inevitable."

A closer look at the house price figures reveals that properties in London sold for an average of £371,223 in December 2012, significantly ahead of the South East, which was the next most expensive following an annual rise of 3%.

The figures also revealed an increased appetite for luxury properties, with a 14% year-on-year increase in the number of properties in England and Wales sold for over £1 million in October 2012.

Strutt & Parker has certainly seen an increase in activity levels in the country market since the start of the year. There has been an encouraging level of new applicants registering for high-end houses (over £2m) particularly in areas in the South East with good commuter links to London. This is likely to filter down the property chain which is encouraging news across the board. In a change from recent years, many of these new buyers have made money in financial services in London, which hints that bank bonuses are starting to influence the property market once again.

Charlie Evans, Partner in Strutt & Parker's Country Department, comments: "In the last two months of 2012, more offers were being made at the guide price, rather than below. The gulf in value between central London and the countryside has never been greater so buyers are starting to look again at moving out of the capital for lifestyle reasons and to cash in on the value difference. This bodes well for 2013 as we have not seen this trend since 2009 and it should have a positive influence on values moving forward."

There was also more promising news for the residential property market in the shape of repossessions, with the figures falling across all regions over the 12-month period.

The data also shows there was price growth across all property types in the 12 months to December 2012 in England and Wales with flats and maisonettes enjoying the largest increases.

Across the board Strutt & Parker has noticed the steady increase in prices across the regions and London and a general feeling of optimism in the air. Green shoots seem to be emerging and there is a positive outlook moving into the year ahead.