Property asking prices have seen a year-on-year rise for the first time since June 2008, according to research.

Property website Rightmove said that the shortage of homes, combined with increasing buyer demand, has spurred property prices by 2.8%.

Asking prices in England and Wales rose by £6,188 during the four weeks to October 10, leaving the average property on the market costing £230,184 - 0.2% more than a year ago.

The rise is the biggest since February last year and the largest for October for six years, the study revealed.

The annual gain was led by a strong recovery in the London property market, where a combination of property shortages and increased buyer demand have left asking prices 5.2% higher than they were a year ago.

At £416,157 the average cost of a home on the market in the capital is now the highest ever recorded by Rightmove, and 0.8% above the previous peak in November 2007.

The group said it was "highly unusual" to see such a strong sellers' market at this time of year, especially given the current economic backdrop.

Miles Shipside, commercial director of Rightmove, said: "It's a little bit crazy to have a sellers' market given the time of year and the warnings of imminent fiscal austerity by all of the main political parties.

"Agents in the north as well as the south are reporting that quality properties are often selling within the week.

"Buyers are ready to pounce on new instructions and are willing to proceed as they believe prices have bottomed, and more are finding the ability to put down the larger deposits required to access the best mortgage deals."

Only around 95,000 new homes were put up for sale during the month, 36% less than during the same month of 2007.

But despite the recent run of positive data on house prices, the group warned that there were still some fundamental weaknesses with the market.

It warned that political uncertainty could cause slower activity, and the market may suffer a pre-election freeze in the spring of next year.

It added that any changes in either supply or demand over the coming months were likely to have an exaggerated impact on house price indices due to the historically low volume of transactions.

All areas of England and Wales saw price increases during the month, except the North and East Anglia, where prices fell by 2.5%.

London saw the biggest monthly gain of 6.5%, followed by Yorkshire and Humberside at 5.3% and the South East at 3%.

Average asking prices are now higher in London, the South East, West Midlands, North West and Wales than they were a year ago.

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