Average house prices in England and Wales have increased by £21,000 or 8.5% in a year taking the typical price of a home to £266,013, the latest index shows.

But when you take London out of the calculation then average prices have increased by 6.3%, showing that the city is driving price growth. But it adds that there are signs of growth slowing.

The data from the LSL/Acadata index also shows that May was the 11th month in a row when average prices increased with a monthly rise of 0.9%.

‘This 8.5% rise is the highest annual increase we’ve witnessed since August 2010, when the housing market was edging back from the throes of the financial crisis, and brings average property prices to a new peak,’ said David Newnes, director of Reed Rains and Your Move estate agents, owned by LSL Property Services.

‘As the vigorous health of the UK housing market catches international and media attention, all eyes have been on how the government and regulators will react. However, the growing clamour for intervention neglects the fact that when taking inflation into account, only London and the South East have seen house price growth in real terms since January 2005,’ he explained.

‘London is in a league of its own, with prices climbing 13.3% on an annual basis. When you take the capital out of the equation, average prices across England and Wales have risen just 6.3% in the last year,’ he said, adding that this price difference is the largest since its records began.

He pointed out that the national recovery is gaining strength, bringing with it renewed consumer confidence and a feel good factor to millions of households. In the past 12 months prices have risen in 91% of the unitary authorities across England and Wales. In fact, in April new record prices were reached in Cardiff, Bristol, Northamptonshire and Cambridgeshire, as growth spreads out from the capital and reaches across the rest of the country.

He also said that there is evidence of the market cooling. For example, annual growth in house sales slowed in May, potentially due to the Mortgage Market Review (MMR) rules introduced at the end of April that have lengthened the mortgage approval process.

‘There are other indications of a cooling in the market, particularly at the top end of the spectrum in London. In total, 12 London boroughs have seen prices fall in April, with the exclusive prime central boroughs of Kensington and Chelsea and the City of Westminster seeing the largest monthly drop in house prices , down 2.7% and 2.9% respectively since March 2014,’ explained Newnes.

‘But outside of the capital, the Help to Buy scheme continues to help first time buyer demand, the engine driving some of the activity in the regions. If supply could follow suit, this would sustain the housing recovery and could help restore some equilibrium across the country,’ he added.