House price reflect both demand and supply, and, as in all markets, equilibrium price will occur at the price that matches current demand to available supply. In the short run, supply is relatively inelastic given that it takes a long time to build new houses. Hence, increases in demand have an especially big effect on house prices.
Over time, demand for housing in the UK has risen continuously while the supply has remained stable. UK house building in recent years has been one of the lowest in Europe, and this has contributed to the rising level of average prices.