Asking prices for U.K. houses jumped above £250,000 ($419,050) in February, up 6.9 percent on the same time last year, marking the highest annual increase for more than six years in a fervent UK property market, according to a new study.
The 6.9 percent year on year rise pushed real estate prices up by £16,223 across Britain, data from property website Rightmove's housing index showed, fuelling further concerns that the country's housing market is trapped in a bubble. Past U.K. housing bubbles have had a damaging effect on the economy when they burst, with many homeowners finding themselves in negative equity. A new crash could also dampen consumer spending, with knock-on effects for Britain's on going recovery.
An 18 percent boost in the number of new sellers compared to a year ago failed to make up for a supply shortage driving property prices higher.
"We need more supply to come to market to stop prices rising too dramatically," Miles Shipside, Rightmove director and housing market analyst, told CNBC in a TV interview.
(Read more: No UK housing bubble, just a London one: EY)
"Supply and demand imbalances remain and are getting worse in many markets, as a result of years of under-provision of additional housing stock, especially in the areas where the local economy and employment are strong," Shipside said in a press release.
While all regions in the U.K. have seen house prices go up, the latest rise has been driven by rapidly escalating prices in London and the south east of England, where house prices are up 11.2 percent and 7.8 percent respectively compared to the year before.