Strong demand from potential buyers combined with a shortage of homes for sale helped to boost the housing market in May, research showed today.
Inquiries from new buyers increased for the seventh month in a row during May to reach its highest level since August 1999, according to the Royal Institution of Chartered Surveyors (Rics).
The number of properties sold by estate agents also continued to rise to reach an average of 11.8 during the three months to the end of May, up from 10.6 in three months to the end of April.
The lack of supply combined with the increase in demand helped to provide some support for house prices, with the balance of surveyors reporting price falls rather than price rises dropping from 58.7% to 44.1%.
Only 11% more chartered surveyors expect to see further price falls going forward, compared with those who think there will be rises, the lowest level since July 2007 when the housing market correction first began.
At the same time, 40% more surveyors expect sales levels to rise in the coming months, the highest level since the question was first asked in 1998.
The Rics survey is the latest in a run of positive data on the housing market, with both Nationwide and Halifax reporting price rises during May of 1.2% and 2.6% respectively.
But despite rising sales and increasing numbers of mortgages being approved for house purchase, economists have warned that any recovery in the housing market is likely to be constrained by rising unemployment and the ongoing problems in the mortgage market.
Rics spokesman Ian Perry said: "On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising.
"However it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand.
"Moreover, with the economic backdrop still quite uncertain, unemployment is set to continue increasing sharply and finance for first-time buyers is still in short supply, there are a number of significant obstacles for the market to overcome over the coming months."
While interest from potential buyers is continuing to pick up, the number of people selling their home fell further during May and has now dropped every month for the past two years.
RICS blamed the shortage of new properties coming on to the market on the introduction of a new rule under which people must have a home information pack in place before they can begin marketing their home.
It said the average chartered surveyor estate agent now had just 58.4 properties on their books, the lowest level since May 2004 and 35% fewer than a year ago.
The balance of surveyors reporting price falls improved in most parts of the country during May, with London remaining the strongest region with only 14% more surveyors reporting falls than rises, followed by Scotland, the South East and the South West.
The West Midlands and Northern Ireland were the only regions of the country where the proportion of surveyors reporting price falls increased during the month.
The increase in new buyer enquiries during May was most marked in London and the South East, with Scotland also seeing a large jump in interest.Reuse content