The average UK house price reached £250,000 in December, tipping thousands of properties into the 3pc stamp duty bracket, official figures show.
The Office for National Statistics (ONS) said house prices in December were on average 5.5pc higher across the UK compared with a year earlier, driven by a 12.3pc increase in London.
Excluding the capital, the growth in prices fell back slightly from 3.5pc in October and November to 3.3pc in December.
Despite this, the figures show all areas of the UK are continuing to grow with a 5.7pc uplift in England, 4.8pc in Wales, 0.5pc in Scotland and 4.8pc in Northern Ireland.
Howard Archer, chief European and UK economist at forecaster IHS, said the buoyant market in and around the capital was spreading out, underpinned by various government initiatives that stimulated demand in 2013.
Two phases of Help to Buy, on newbuild homes in March and then for the wider market in September, were launched while the Funding for Lending Scheme (FLS), which handed cheap loans to banks and building societies to encourage lending, pushed down average fixed-rate mortgage rates by a full percentage point, according to Bank of England estimates. These rates have begun to rise in 2014, but Mr Archer expected little impact on the market.
"Housing market activity is being supported by substantially improved consumer confidence, markedly rising employment and extended low mortgage interest rates and is still being fuelled by the Help to Buy initiative." he said.
"House prices look set to see further strong increases over the coming months despite the Bank of England ending Funding for Lending support for mortgage lending from the start of January."
The FLS has been redirected to focus solely on small business lending.
House prices have exceed their 2008 high, in nominal terms
Annual rate of change in house prices
The figures align with Rightmove's announcement yesterday that the average asking price of a home has risen to £251,964 in England and Wales. In London, sellers are typically looking to make £541,313 from their properties.
The ONS said first-time buyers paid 7.4pc more for property in December than at the same time a year ago. Existing owners paid an additional 4.7pc over the same period.
Rory Penn, partner of London estate agency VanHan, said if this trend continues, lack of affordability could start to become an issue. "For now, however, it's the best opportunity for first-time buyers to get on the housing ladder for some years with interest rates at historic lows, even if some lenders are starting to increase their longer-term mortgage pricing," he said.
However Andy Knee, chief executive of property services firm LMS, warned getting a first home is still a challenging aspiration for many. He said that with wage growth still "sluggish", it will be vital that more homes are built this year to satisfy the demand.
There have been growing concerns that a house price bubble is forming, particularly in London and the South East where there is a substantial lack of properties and prices are soaring. Senior commentators such as Vince Cable, the Business Secretary, and Adair Turner, the former head of the City watchdog, have called for Help to Buy to be reined in to slow house price growth.
There have also been fears that interest rates could rise sooner than expected. However figures released today show inflation fell below the Bank of England's 2pc target for the first time in more than four years, easing the pressure on the Bank's Monetary Policy Committee to begin raising interest rates. Mark Carney, governor of the Bank of England, has hinted interest rates will not rise in the near future.