Average UK house prices reached an all-time high of £250,000 in November as the buoyant housing market confounded wider economic gloom.
In London the average sold price exceeded £500,000, Land Registry data showed, with valuations pushed upwards by a tax break for property sales and ultra-low interest rates.
Analysts said some air was likely to come out of the property bubble next year if the chancellor ended the stamp duty holiday as planned on 31 March.
However, Rishi Sunak is reportedly considering extending the giveaway to property buyers in his March Budget.
The stamp duty holiday, which applies in England and Northern Ireland, means the property tax only applies to purchases above £500,000. It was introduced as a temporary measure to boost the economy in response to Covid-19.
Under rules already in force before the pandemic, first-time buyers do not pay the tax on any purchases up to £300,000.
The latest official figures show UK property values jumped 7.6 per cent in the year to November 2020, the fastest annual growth rate since June 2016. In London the average hit £514,000.
The figures again highlighted large disparities between regional housing markets. Property prices in northeast England rose to £140,000, marking the first time that average values have surpassed a peak reached in 2007 before the financial crisis.
London and Yorkshire and the Humber recorded the joint highest growth, with average prices rising 9.7 per cent.
Average house prices increased over the year in England to £267,000 (a 7.6-per-cent annual increase), Wales to £180,000 (7 per cent), Scotland to £166,000 (8.6 per cent) and Northern Ireland to £143,000 (2.4 per cent).
Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the coronavirus pandemic started and a response to the changes made to property transaction taxes across the nations, the Office for National Statistics (ONS) said.
The ONS said demand for property in inner-London may be particularly responsive to the temporary stamp duty holiday, which ends on 31 March, as property prices are high and therefore so is the corresponding tax to be paid.
London also has a relatively high proportion of properties bought for investment, including from cash buyers and overseas investors. As such, demand for property in inner-London is likely influenced by a broader range of factors than the rest of the UK, the report said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Come December's data, the average property price will have likely broken through the £250,000 barrier."
He said lenders are working "flat-out" to help get deals already agreed completed before the end of March.
Mr Harris continued: "That said, there is still good availability of credit, despite demand, with competitive rates and more choice at 90 per cent loan-to-value."
But Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: "The scenario in which house prices reverse some of their recent gains this year is clear to see."
He said the eventual withdrawal of the furlough scheme, mortgage payment holidays and the return of the stamp duty threshold to its former level "likely would leave house prices about 2 per cent lower by the end of the year than at present".
Mr Tombs added: "Most of the recent rise in mortgage rates reflects banks' repricing for the greater risks of lending in the current environment and so likely will persist, even if demand for mortgages eases. That said, government policies are not fixed."
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: "Given the length of time it takes for sales to go through, there's every chance that if you make an offer in 2021 you won't have completed the purchase by the (stamp duty) deadline.
"This is likely to take some of the urgency out of the market in the first three months of the year."
Additional reporting by PA