AVERAGE home prices increased marginally in England in January, month on month, and fell in Scotland and Wales, with a north-south divide showing in the latest published index.

Average prices in England increased by 0.3 per cent compared to December and fell by 0.2 per cent in Wales and by 0.3 per cent in Scotland, according to the Home.co.uk index.

Price growth in England was led by a 1.9 per cent month on month rise in the east of the country, taking the average price to a new all-time high of £348,651.

But Greater London saw the weakest growth in England, with a monthly rise of 0.1 per cent and prices in the capital are now 1.2 per cent lower than a year ago.

The overall rate of annual home price growth for England and Wales fell to three per cent, while in Scotland, annual growth was 2.3 per cent, taking the average price in England and Wales to £298,445 and in Scotland to £177,037.

After the east of England, the next best regions for price growth were the East and West Midlands, the North-West and the South-West, with all four showing price growth of between 4.9 per cent and 4.1 per cent over the last 12 months.

The report also points out that both the East and West Midlands have seen some of the largest annualised rent increases at 11.4 per cent and 12 per cent respectively.

But Yorkshire recorded the largest rent rise at 14.4 per cent.

Rents were down by 1.4 per cent in Scotland and hardly moved in the North-East with growth of 1.7 per cent.

Home.co.uk director Doug Shephard believes that prices could rise in regions where rents are increasing as it is a sign that buy to let investment is strong.

“It is an established fact that some of the best BTL yields in the country are to be found in the North, and Yorkshire will not be alone in attracting the attention of investors going forward,” he said.

“On the basis of buy to let investment yield, Wales, the North-East and Scotland also look promising.

“However, the various new tax rules recently imposed will mean astute investors will be incentivised to focus on locations that offer the best yields and rising rents.

“Home prices have been, are, and always will be underpinned by rents.

“Yields, be they dividends, interest on capital or rents, are always tied to the underlying investment.”