London house prices leapt by 11.2% over 2013 - an increase which is more than double the national average, Land Registry figures show.
Across England and Wales, property prices grew by 4.4% in the 12 months to December to reach £167,353 typically, which is also 1.1% higher than in November.
But in London, the price of a property now stands at around £403,792, following an uplift that is "considerably higher than other regions," the Land Registry report said.
London, which continues to see strong interest from overseas property investors, was also the region which saw the strongest month-on-month price growth in December, at 2.6%.
Within the English capital, Hackney, which helped to host the London 2012 Olympics, was the borough with the strongest annual rise in house prices.
Values in Hackney are almost one fifth (17.2%) higher than they were a year ago, now standing at £502,129 on average.
The only region across the country to see property values fall year-on-year was the North East, where they edged down by 0.1% to £97,596 on average.
At a local authority level, Hartlepool in the North East saw the biggest annual price fall across the country, with a 6.6% drop taking average prices to £70,350.
Meanwhile, Neath Port Talbot in South Wales saw the strongest monthly growth at a local level, with a 3.3% increase pushing typical values to £84,815.
Across Wales, prices rose by 3.5% across 2013 to reach £118,268 on average.
The Land Registry figures also show how house sales lifted in 2013 as life returned to the housing market.
From July to October 2013, the latest months for which figures are available, an average of just over 75,500 properties were sold a month.
In the same period in 2012, the monthly sales average was just over 59,000.
Matthew Pointon, a property economist at Capital Economics, said that in the short-term, further price rises were likely, due to "a shortage of homes for sale driving up prices".
He said that looking further ahead, prices should moderate as more people are encouraged by the improving housing market to put their homes up for sale.
Campbell Robb, chief executive of housing charity Shelter, said: "These worrying figures show that house prices are continuing to spin out of control, taking with them thousands of young people and families' dreams of a home of their own.
"However hard they work or save, many are left with no choice but to remain trapped in insecure rented homes or living in their childhood bedrooms, watching the prospect of a stable home slip further away.
"To give future generations a chance, the Government needs to roll up their sleeves and come up with bigger, bolder ideas to get more affordable homes built."