UK house prices increased by 1% in June and were 11.8% higher than June 2013, the Nationwide Building Society has revealed.

House prices have now surpassed their 2007 peak. The average price (not seasonally adjusted) in June was £188,903, up from £186,512 in May.

Robert Gardner, Nationwide’s chief economist, said: “House prices recorded their 14th successive monthly increase in June, rising by 1%. As a result, the annual pace of price growth picked up to 11.8% from 11.1% the previous month.

“In seasonally adjusted terms house prices reached their 2007 peak in Q2, just as UK economic output is likely to have surpassed the high water mark reached before the financial crisis.

“While all regions recorded annual price gains for the fourth quarter in a row, there is still significant variation across the UK, with the South of England continuing to record the strongest rates of growth. In particular, London continued to outperform, with prices up by almost 26% in Q2 compared to the same period of 2013.

“The price of a typical property in London reached the £400,000 mark for the first time, with prices in the capital now around 30% above their 2007 highs and more than twice the level prevailing in the rest of the UK when London is excluded. In the UK as a whole, prices are less than 1% above their pre-crisis peak. Excluding London they are 0.4% below peak.”

Jonathan Samuels, chief executive of Dragonfly Property Finance, said: “House price growth of 26% in London, bringing it to 30% above the 2007 peak, is mind-boggling. Forget orbit, London has entered another dimension.

“Despite the raft of big numbers announced by the Nationwide, there is every reason to believe the market in the UK as a whole will slow in the months ahead. And that’s probably for the better.

“The Mortgage Market Review has clearly had an impact on mortgage approvals and is likely to slow the rate of growth in the near term, while the looming prospect of rate rises will also play a role.

“When it does come, the interest rate up-cycle, however slow, moderate and protracted, will dampen demand.

“The rate of house price growth has ramped risk levels significantly and buyers, especially in the capital, need to be vigilant.

“The Bank of England also needs to be vigilant. The property market getting out of control is a genuine threat to the recovery of the economy.”