The average asking price for a home in London has risen to more than £500,000 and adds to fears of a new house price bubble, fuelled by cheap mortgages and government schemes to boost the market.

The average price of a house coming to market in the capital jumped by £16,000, or 3.3%, in a month to a record £509,000, while the London borough of Camden has joined Westminster and Kensington & Chelsea in an “elite club” where the average price is more than £1m.

Cheap mortgage rates for those buyers with decent deposits, courtesy of the government’s funding for lending scheme, are driving positive sentiment and sales from the £250,000 to £750,000 range.

In London, with demand for properties far outstripping supply, open-house viewings attended by multiple buyers were becoming more commonplace, and sealed bids were the norm in some areas.