But the boom may not go on much longer because mortgage rates could soon rise, homeowners were warned yesterday. Pointing out that the US raised interest rates before Christmas, Chancellor George Osborne said: “There will come a point where that happens in Britain, so we’ve got to be ready.”

He said the US rise was the beginning of the end of the era of “very, very low rates” put in place after the financial crisis of 2007-8. Record low interest rates are one of the factors fuelling Britain’s house price bonanza, along with an improving economy and demand from buyers outstripping supply.

According to Halifax, Britain’s biggest mortgage lender, the average price of a home at the end of last year was £208,286, up from £189,428 a year earlier – a rise of 10 per cent. Despite the Chancellor’s warning, property experts remained bullish yesterday.

Many believe the market will continue to flourish on the back of rising levels of employment and wages, and a raft of cheap mortgage deals.

Jeremy Duncombe, director of the Legal & General Mortgage Club, said: “House prices continued to rise in December, ending a year that has seen house prices steadily increase well above inflation and wage growth.

“Without a strong house building programme from the Government, this trend will continue well into 2016, making home ownership harder to achieve for many.

“This week’s announcement from the Government committing to directly deliver 10,000 new homes on public land is to be welcomed.

Measures such as this will go some way to address the UK’s housing crisis.

“However, more must be done to tackle the current cycle of rising demand and a lack of supply which is locking an increasing number of people out of home ownership.”

Mr Duncombe also called for the introduction of incentives to help unlock the vast amount of property in the hands of owners who are living in homes which no longer fit their circumstances.

“Tax breaks and reductions in stamp duty for this sector of the market should be encouraged to help more people to ‘right-size’ and free up a significant amount of housing stock,” he added.

“By doing this, we can better ensure more people are able to take their first or next step on the housing ladder.”

Interest rates will have been at their historic low level of 0.5 per cent for seven years in March and, with no rise on the immediate horizon, cheap mortgage deals continue to support the buoyant property market.

Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: “Prices look set to move in only one direction throughout 2016.

“Rising interest rates could reel the market in but they appear unlikely to come any time soon.

The Chancellor is talking of a cocktail of threats to the UK economy, but it will take a considerable change in economic conditions to throw the current market off-course.”

Martin Ellis, a housing economist at Halifax, said the latest figures indicated a possible slight softening in the underlying pace of house price growth.

“There remains, however, a substantial gap between demand and supply with the latest figures showing a further decline in the number of properties available for sale,” he said.

“This situation is unlikely to change significantly in the short term.”

www.express.co.uk