London house prices up 16pc

The average price of a London home has increased by £57,000 annually to £456,000 compared to a £17,000 increase to £252,000 for the whole of the UK.

London prices mask weaker performance from the rest of Britain. Prices have increased by 8% in the year to March 2014 for the whole of the UK but if you remove London and the South East from the equation this drops to 4.7%.

Nicholas Barnes, head of research at Chestertons, said: "The strength and diversity of buyer demand - which includes a high proportion of investors and high-net-worth individuals with deep pockets - when matched against insufficient supply goes a long way towards explaining this growth.

“Yet it is also interesting to note that the strongest growth at borough level is no longer in the traditional prime locations but rather in up-and-coming areas such as Waltham Forest, Lambeth and Hackney.

"However, house price growth is far from uniform across the country and the national figure is somewhat distorted by London.”

The South East is seeing the second highest regional price growth at 7.1% from Q1 2013 to the end of Q1 2014, followed by the East at 6.3%.

The North has seen less than 5% while the Midlands is not far above this level.

Barnes added: “Nationally, transaction volumes are still only running at around two-thirds of their pre-global recession peak.

"There is a danger of assuming that because the London housing market may be heading for a correction – but this does not mean a crash – the rest of the country is in the same boat.

“This is far from the case and indeed the majority of markets outside London still require nurturing... to ensure that the recovery is sustained and aspiring homeowners can achieve their dream."