House prices are flying high in the UK and especially in the capital city of London.  The average house price in the city now stands at more than £500,000.  The average price of a home across the rest of the UK now sits at more than £271,000.  This is a new record high for house prices.  Prices have now risen more than 11.5% over the last twelve months.

UK housing costs continue to rise as the last three months have seen consecutive double digit price increases.  The new high prices across the UK are mostly above the pre-financial crisis values.  The belief from the latest data is that the UK housing boom has been the fire behind the overall economic resurgence.

London is leading the way in increasing property values as the average price of a house in the Capital City now sits at £514,000.  The value has reached this new high point thanks to an almost 20% year on year increase in prices.  However, the market is beginning to show signs of slowing down according to other data.

Chief economist at Markit, Chris Williamson, claims the month on month rises in prices helps the market and will "add to worries that the property market poses a key risk to financial stability".

Howard Archer, chief economist at IHS Global Insight, commented on the current market conditions, saying: "Stretched house prices to earnings ratios, the prospect that interest rates will start to rise before long and tighter checking of prospective mortgage borrowers by lenders will likely have some limiting impact on buyer interest.

"Even so, with the economy seen holding up pretty well going forward, employment high and rising, consumer confidence elevated and earnings growth likely to improve (particularly in 2015), and with housing supply still tight in a number of areas, house price growth seems unlikely to fall away."