Key "Des Res" areas, such as Richmond in London and Guildford in Surrey, have seen prices jump by more than a fifth in the last year - while neighbouring areas have barely increased.
The survey also shows that owners of older homes are enjoying more of the benefit of the increase. The price of the average property built before 1945 jumped by 8.3 per cent last year, while modern homes rose by 7.4 per cent. New homes rose in price by just 4 per cent.
As an investment, terraced houses have outperformed other houses. This is because buyers, especially in the South-east, see detached and semi- detached houses as out of their price range.
Nationwide is predicting that prices across the country will stage a strong recovery in the new millennium after suffering a slow year in 1999, when the value of the average property will edge up by 3 per cent.
The survey shows house prices rose steadily in 1998 at 7.3 per cent, in line with predictions from the country's biggest lenders. That represented a marked slow-down from the 17 per cent inflation seen at the beginning of the year.
Particular regions are already suffering. Homeowners in Yorkshire and Humberside saw prices slip by 0.2 per cent in 1999. House prices in Scotland and the north of England rose by less than 1 per cent.
In London - the key driver for house-price inflation - prices will tail off significantly this year as the UK enters a technical recession, economists predict.
While prices have held up, fewer houses are being bought and sold. The number of housing transactions fell by 16 per cent last year, to around 300,000. It is expected to fall further in 1999.
Economists at Deutsche Bank predict that as the market slows down, annual inflation will "bottom out" at 2 per cent in the third quarter of this year. "House prices aren't going to tumble like the recession of the early 1990s," said an economist at the bank.
But Nationwide still sees grounds for optimism. Economic factors such as average earnings suggest house prices are still some 15 per cent below their long-term trend. "We expect an upturn by the millennium as housing looks set to remain affordable," it said.