"Although Rightmove‘s figures are based on asking, rather than selling, prices, there still seems to be scope for further increases."
Prices are now 9.5% higher than a year ago, the highest annual rate of growth since September 2014.
Rightmove says there are signs that both buyers and sellers "fear missing out" in the current competitive market. More potential buyers are sending enquiries to agents, with the number 16% higher than this time last year.
At the same time new property listings are up 11% compared to the same period last year, suggesting more sellers are coming to market before looking for a property to purchase to avoid missing out on their next home.
Additionally, the number of people requesting a home valuation from an estate agent was up 11% in January compared to last year.
London has recorded the biggest annual jump in the number of buyer enquiries of any region, as well as the highest annual rate of price growth since 2016, as the end of pandemic restrictions and a return to the office fuel renewed demand in the capital.
Director of London estate agent Benham and Reeves, Marc von Grundherr, commented: “There have been numerous signs that the London market is starting to turn in recent months and it is very likely we’ve now seen the back of the capital’s pandemic house price slump.
"The start of 2022 has been exceptionally busy and buyer enquiries have shot through the roof, as London home buyers try to get in quick and secure a purchase before house prices start to accelerate.
"It’s only a matter of time before this initial buyer demand and the sharp increase in asking prices starts to filter through to completed sales, at which point we expect home sellers across the London market will further up their asking prices as a result of this growing market confidence.”
Jeremy Leaf, north London estate agent and former RICS chairman, said: "The market is continuing where it left off at the end of last year. Although Rightmove‘s figures are based on asking, rather than selling, prices, there still seems to be scope for further increases.
"Demand hasn’t been blown off course so far by the weather, rising interest rates or inflation as we have recorded a significant proportion of buyers who missed out in some of last year's competitive bidding returning for another try.
"Listings are increasing but not fast enough to satisfy appetite for houses in particular which is inevitably reducing the number of transactions.
"Looking forward, stretched affordability will mean prices cannot keep rising at the same pace but certainly there's no sign of any significant softening yet."