The Nationwide house price index has shown that property prices in December increased by 1.2 per cent.

This has brought the annual rate into double digits for the first time since February 2005 at 10.5 per cent.

According to Fionnuala Earley, Nationwide's group economist, this means that prices rose three and a half times faster than they did last year, exceeding expectations.

"December's increase of 1.2 per cent brought the annual growth rate up to 10.5 per cent, way above the widespread expectation this time of year that annual house price growth would be in low single digits," said Ms Earley.

"The price of a typical house increased by the equivalent of £45 per day in 2006 – three and a half times faster than the £12.50 per day in 2005 – bringing the price of a typical house up to £173,746."

Many people find that making home improvements to their existing house rather than moving is a good way to capitalise on their current investment.

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Author:  Joanne McCabe