House prices rose by to 0.7 per cent between September and October, according to Nationwide.
But year-on-year house price inflation still stood at eight per cent down only fractionally from 8.2 per cent in September and the price of the average British home reached #169,623, the building society said – more than #12,500 higher than this time last year.
Fionnuala Earley, Nationwide's economist, distanced herself from suggestions that the latest surge in house prices is no more than a London phenomenon.
"Prices are increasing across the UK, but at different rates," she said. "The most intense pressure in Northern Ireland, Scotland and London." She expects the housing market in areas near to London to follow the capital's trend before long.
Ms Earley also suggested that high prices and falling yields from rents may cause some buy-to-let investors to turn to shares.
"While property prices are at an all-time high, the value of the equity market has only just returned to 2000 levels after reaching a trough in 2003," she pointed out. "Some may therefore believe that the potential for future growth in the stock market could be rosier than for the housing market."
Meantime Britain's biggest house-builder, Persimmon, told City analysts "The new housing market has not changed since we last reported on August 22 when we con firmed that visitor levels to our show homes were good and prices remain firm.
"However, the market remains competitive and the use of selective incentives has continued."