London house prices have increased at a faster rate that the rest of the UK during the first quarter of 2006, new figures reveal.

Data from lender Nationwide shows that the average value of a home in the UK rose by 4.9 per cent over the year to March, with the average home in Britain now costing £160,319.

The regional report marks the first time in four years that the Nationwide index has shown higher price rises in London than the UK average and indicates that steep housing market growth in other regions of the country will follow.

Property prices in all areas of the UK increased during the first three months of the year, with market growth accelerating to 2.3 per cent for the quarter, the fastest rate of increase since summer 2004.

The fastest region for growth was Northern Ireland, with house prices up by 17.6 per cent on the same quarter of 2005, while the property market in the north of England experienced growth of just 0.5 per cent over the year.

Nationwide group economist, Fionnuala Earley, commented: "Recent research suggests that the ripple effect from London is a significant factor in regional property prices with areas closer to the capital feeling the strongest impact."