A senior economist has warned about the dangers of a house price bubble, following figures that show prices are surging.

In its latest monthly survey, Nationwide said prices across the UK are now 5.8% higher than this time a year ago. That figure is up from 5% only a month ago. Howard Archer, the chief UK economist with IHS Global Insight, warned that policymakers need to be vigilant.

"The acceleration in house prices...will fuel concern that we could be on our way to a new housing bubble," he said.

He added that the UK is "currently some way off from an overall housing market bubble", but warned that the government will need to act "quickly and decisively" if the housing market does become overheated. He is forecasting that house price inflation could reach 8% in 2014.

Earlier this month, Peter Spencer, the chief economic adviser to the EY Item Club, said that the chances of seeing another housing market bubble are "extremely slim."

'Affordable mortgages' Nationwide said that prices increased by 1% in October, taking the average price of a home in the UK to £173,678. However, it pointed out that prices are still 7% below their peak in 2007. It also said that mortgages remain unusually affordable.

"Typical mortgage servicing costs remain modest by historic standards, thanks to the ultra-low level of interest rates," said Robert Gardner, the Nationwide's chief economist.

UK house prices

Earlier this week the Land Registry reported that prices in England and Wales were rising at a more modest rate. It said prices increased by just 3.4% in the year to September, only slightly higher than inflation.

Whereas the Nationwide figures are calculated on the number of mortgages it agrees to give its customers, the Land Registry figures are based on actual sales.

Cash buyers

It therefore includes cash buyers.

One estimate claims that homes are being bought with cash in over a third of cases. According to Hamptons International, the property agents, 35% of sales in the first six months of 2013 were for cash.

Earlier in October, the Office for National Statistics said that prices across the UK as a whole had reached a record high. It calculated that the average price of a UK property was now £247,000, the highest it has ever been.

Its figures are based on the number of mortgage completions.