Not yet, believe it or not, but research suggests one is looming and could appear within the next two years

London’s property market could start showing bubble-like behaviour in the coming 18 months, according to academics at Lancaster University.

The university’s Housing Observatory report found that despite UK house prices hitting a string of record highs in recent months, there are no signs of “exuberance” – meaning a bubble of over-priced property at a national level.

But the London market, which has been the driving force behind much of the house price growth, is close to entering a bubble-type phase – and this could happen by 2017 – it found.

With London leading the UK market, there could be a risk of a “ripple effect”, whereby the bubble behaviour spreads to the regions surrounding the capital – and from there to the rest of the UK.

Land Registry figures show that the average London house price was just short of half a million pounds in September, having surged by 9.6 per cent over the last year to reach £499,997. Across England and Wales as a whole, the average property value was £186,553 in September.

According to a separate house price study run by Nationwide Building Society, average UK property prices reached a record high in cash terms in October, at £196,807.

Last week, a “global real estate bubble index” from Swiss bank UBS found that the risk of a property bubble is most distinct in London, followed by Hong Kong.

Professor Ivan Paya, of Lancaster University Management School, said: “Boom and bust in housing markets has a major impact on people’s lives. UK housing prices have reached a new high, surpassing those of 2007, and it’s important we try to anticipate the kind of price crashes that lead to negative equity and hefty, disproportionate mortgages.”

Prof Paya said analysis of the housing market in the third quarter of 2015 “suggests that London is heading towards what we call ‘exuberance’, a bubble of overpriced property, if prices continue to rise at the same rate over the next 18 months.

“There is the potential of a ‘ripple’ effect to the Outer London Metropolitan area – also seeing higher than average price rises – and eventually nationally.”