A similar house in East Dulwich would probably cost £1.2m (example)
East Dulwich has been 20% higher for as long as I can remember, but in a market where house prices are rising by possibly 10-20% per year, it makes it difficult to keep track of market values.

My view (and I have no expertise in this area) is that the current growth rates are impossible to maintain. London house prices have been depressed for a few years, with little if any growth. This was mainly due to banks being unwilling to lend to first time buyers (plus a lot of belt tightening across the economy). Now we have increased government support for first time buyers, and some large bonuses being paid out to the wealthiest in society.

It isn't too surprising that prices go up a bit dramatically after this depression, especially in areas where houses are underpriced compared to other areas of London. But the growth should slow down and demand and supply start to match a bit better as people who have been unable to move in the last few years find places to move to. However, I find it very unlikely for house prices to drop below today's levels. And buying a nice house in Forest Hill still seems like a good investment in your future (if you are lucky enough to be able to afford it).