Residential property prices are 30% higher than they were at peak of the market back in 2007, according to Zoopla’s latest house price index.

The average price paid by home buyers now stands at a record high of £230,700, up 5.4% year-on-year, but Zoopla thinks they will start to fall in the near term.

However, low stock levels remain a serious problem for estate agents and buyers, despite a dip in demand over the past few weeks.

The number of properties up for sale was around a quarter lower in the first six months of this year than it was at the same point 12 months ago, Zoopla said.

The stock shortage problem has been exacerbated by a sharp rise in demand from property purchasers, most notably first-time buyers.

At a regional level, house price growth was at its highest in the North West (+7.3%) and Yorkshire & the Humber (+6.8%), while London trailed behind with annual house price growth of 2.3%.

Demand in London is polarised between inner and outer, with demand in outer London running 86% ahead of the 2017-19 average.

In contrast, demand in inner London is running just 2% above the ‘normal’ market average.

This is also reflected in the pricing of properties, with London flats, predominantly clustered towards the centre, dipping by 0.5% n the year to June. In contrast, houses have registered growth of 5.6% in the past year.

Looking at other major cities, Liverpool has performed well as house prices grew by 8.9% in the past year.

Rochdale, Bolton and Hastings all saw property prices increase over 9% during the period, while Belfast, Manchester and Sheffield saw prices rise more than 7%.

Property sales levels up and down the country are running about 22% higher than they were last year, but buyer demand slipped 9 per cent in the first half of July after the initial phase of the stamp duty holiday ended.

But transaction volumes are still around 80% higher than they would normally be at this time of year.

Grainne Gilmore, head of research at Zoopla, said: “Demand is moderating from record high levels earlier this year, but remains significantly up from typical levels, signalling that above average activity levels will continue in the coming months

“Demand for houses is still outstripping demand for flats. To a certain extent this trend will have been augmented by the stamp duty holiday, with bigger savings on offer for larger properties – typically houses.

“But underneath this, there is a continued drumbeat of demand for more space among buyers, both inside and outside, funnelling demand towards houses, resulting in stronger price growth for these properties.”

She added: “Overall buyer demand coupled with constrained supply signal that price growth will continue to rise in the coming months, peaking at around six per cent, before falling back to between four per cent to five per cent by the end of 2021.”