In total house prices are up 8.9% from a year ago, the highest annual increase in six years.
Asking prices rose by 3.6% in May, averaging £9,409, the largest ever rise recorded at this time of year.
With the much publicised lack of housing supply in the capital, London asking prices are a staggering £80,000 higher so far in 2014, or £4,500 a week, a far cry from the rest of the UK where asking prices increased by £1,500 per week.
To maintain a healthy ratio of supply and demand 250,000 homes would need to be built every year, around double what the market is currently seeing.
Miles Shipside, Rightmove director, said: “The capital now needs a programme of mammoth proportions to create a flood of housing supply.
“More major transport initiatives, satellite new towns and the release of building land for both the private and social sectors will help to relieve upwards price pressure and give better options for both its inhabitants and its economic success.”
Jeremy Duncombe, director of Legal and General Mortgage Club, agreed that there is a significant North-South divide when it comes to supply.
He said: “Any recovery in the housing market needs to be built on solid foundations, and another core issue that needs to be addressed is the imbalance in housing supply and demand.
“Building more homes across the country would help to keep house prices at sustainable levels, allowing more people to ultimately own their own home.
“Although house prices are showing an overall increase across the country, there remain significant regional differences. Broadly speaking, prices in the north of the country are not rising in line with those in the south.
“This imbalance means the Government has to walk a fine line between boosting the market in certain regions whilst stopping prices from racing too far ahead in others.
“Whilst the Help to Buy scheme has drawn criticism from some quarters, the latest data shows that the majority of applications are coming from the north of England*, suggesting that it is being used to successfully target the areas that still need extra stimulus.”
Canary Wharf has seen house prices rise by a staggering 43.1% annually.
Ben Butler, sales manager of Morgan Randall in Canary Wharf explained: “Around 65% of the properties we are selling are going to cash buyers and we haven’t sold a property for under asking price since around August 2013.”
But Paul Wilson of Leeds-based estate agent Dacre, Son & Hartley, said: “All the talk of the rising prices in London and a supposed nationwide bubble has created a wave up the country of vendors raising their expectations, and in some cases putting their property on the market for too high an asking price than is realistic in the market here.
“Those properties that are put on at sensible prices are moving quickly, so we are advising people they need to be realistic with what they expect to get.”
And John Penn, head of mortgage proposition at Intelliflo, added: “Although recent figures have shown that house price growth is slowing, the numbers are still considerably higher compared to the same period last year. These latest stats also reiterate the fact that the speed of the market is extremely regional with London and the South East driving the rest of the UK.
"The continued price rises in these two areas are sparking concern that the market runs the risk of overheating.
"A key factor pushing up prices is the huge spike in property demand we’ve seen recently, coupled with a significant lack of housing supply.
"In order for the supply/demand balance to reach a healthier ratio, the estimated number of houses being built each year needs to reach a figure close to 250,000 – roughly double the figures we are currently seeing.
"Whilst confidence has certainly started to return to the market over the last 12 months it is key that the issue of housing supply is addressed to ensure that the housing recovery is both stable and sustainable.”
