The UK property market ends 2013 in a buoyant mood with figures showing prices up 5.5% over the year and 12% in London.
But the market in the capital is now looking "seriously toppy", estate agents have warned.
If London and the South East are taken out of the figures, UK house prices rose a more sustainable 3.1%, according to the latest ONS House Price Index for October.
James Hall, director of estate agent Fishneedwater, said: "12% annual house price growth in London is one hell of a big number.
"There's little doubt that the charge in UK house prices is being led by the South East and London, and this data really drives that home.
"While 3.1% feels like an appropriate and sustainable rate of growth, 12% is seriously toppy.
"In the capital, gazumping is a regular occurrence and properties are selling well over asking price in many areas. The market is disconnecting from economic reality.
"Many people, especially first time buyers, fear that if they don't buy now they will be left behind.
" The refocusing of the Funding for Lending Scheme could see the rate of growth slow but that will be no bad thing," Hall said.
Alexander Gosling, director of the online estate agents Housesimple, said London is at risk of "overheating". "It is the slow burning improvement in prices outside the capital and the South East that offers real hope for continued growth."
David Brown, commercial director of LSL Property Services, said first-time buyers are having to leap higher than ever before to join the property ladder, with first-time buyers paying on average 5.9% more than in October 2012.
"Prices are rising even faster for those buying their first home, leaving many unable to get the property they would have hoped for with their hard-won deposit and mortgage offer."
Richard Sexton, director of e.surv chartered surveyors, said: “Collectively the property market is singing a sweet tune, with prices picking up across the country.
"Monthly home loans have topped the 70,000 mark for the first time since the recession, and the mortgage market is becoming much more accessible, as lending to borrowers with small deposits has doubled in the past year.
“We must keep a tight rein on the recovery of the market, to ensure prices remain affordable for all.
"The volume of house-building needs to be dramatically increased, particularly in the capital, where the competition for homes is forcing house prices up at a rapid rate.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said the housing market is still some way off its peak in terms of prices and volume of transactions.
"Mortgage rates remain at rock-bottom and we expect this to continue in the spring despite the repositioning of the FLS.
"Lenders are still very keen to lend with many telling us they are expecting a strong first quarter. This means keeping rates low and competitive, which is good news for borrowers.
"It is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens.'
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