House prices have climbed £7,000 over the last 12 months and sales have risen 8 per cent, according to the latest figures from LSL Property Services.
LSL estimate the average house price for January at £227,478, a considerably higher figure than the £162,932 suggested by Halifax and a similar one from Nationwide. These reports are compiled using different methods but the LSL's are closer to the quarterly Land Registry figures which also include, for example, new-build sales.
David Newnes, director of LSL Property Services said: "Sales activity and prices in London are charging along at a furious pace which is dragging national house prices up on its coat tails. Take the capital out of the equation and the average rate of house price growth in England & Wales falls to 1%."
Meanwhile, the proportion of households who own their home has dropped to its lowest level in 25 years as the private rental sector has boomed, according to the English Housing Survey 2011-12. The majority of households are home owners - around 14.39 million - but at 65.3 per cent of households this is the lowest proportion recorded since 1987.
The survey also reported an increase in the proportion of households in the private rental sector which are classed as overcrowded, meaning that the number of bedrooms is not enough to avoid "undesirable sharing".
Campbell Robb, chief executive of charity Shelter, said the figures were bad news for anyone struggling to find a decent and affordable home. "As saving for a home of their own becomes increasingly out of reach, many have no choice but to live in rented homes for years on end."
Recent research from Rightmove suggested that three-fifths of private renters are trapped because they cannot get onto the property ladder.