City bonuses and wealthy foreign buyers are pushing up London house prices at their fastest pace since 2002, driving the capital's housing market away from the rest of the country.

The latest FT house price index, published yesterday, shows London house prices rose 12.7 per cent in the 12 months to October. If the monthly growth rate continues, the annual rise will be between 11-12 per cent by December - the highest since December 2002, when prices rose an annual 16.7 per cent.