The imbalance between supply and demand for houses is pushing property prices higher in the UK, even as the impact of government schemes such as Help to Buy are reducing people's interest to rent, according to a survey.
The Royal Institute of Chartered Surveyors (Rics) said "rocketing interest from would-be buyers dwarfed the amount of properties coming onto the market", raising house prices once again in October.
In the Rics survey, the proportion of surveyors reporting price rises touched an 11-year high at a net balance of 57% in October. That compares to the previous month's net balance of 53% and analysts' forecast of 59%.
"This is the highest reading since June 2002 and demonstrates the impact that the imbalance between supply and demand is having on the market," Rics said in a statement.
At the same time, demand for rented accommodation is rising more modestly than previously, according to Rics. In the latest Rics survey, a net balance of only 11% of respondents reported rises in interest from potential tenants during October, the lowest reading in over ten years.
Besides, the number of homes sold rose to an average of 20.3 in the three months to October, the highest since February 2008.
"Almost every region of the country saw transaction levels increase which further demonstrates that the recovery is spreading beyond the traditional economic powerhouse of London and the South East," Rics said.
The respondents in the survey expect both house prices and transaction numbers to increase further over the coming three months.
Help to Buy and Rising Demand
The UK government originally launched the Help to Buy scheme in April to assist first-time buyers to get on to the housing ladder.
Subsequently, it announced the second phase of the scheme extending benefits to existing home owners and accelerated the launch of the second part introducing government-guaranteed mortgages on 8 October. The second phase guarantees up to £130bn ($208bn, €155bn) of mortgages on new and existing homes.
The second phase had a good start with a significant number of home buyers applying in the first month of launch of the scheme. State-backed Royal Bank of Scotland (RBS) and Halifax, which enrolled for the scheme, said they have received a total of 2,384 applications, worth about £365m in mortgages.
Rics noted that Help to Buy is boosting buyer numbers, but the lack of supply of new homes is proving problematic.
"A greater willingness by lenders to increase loan to values on mortgage products allied to the Help to Buy scheme has meant that more and more first time buyers are in a position to enter the market," said Simon Rubinsohn, chief economist at Rics.
"In spite of this, the amount of homes currently up for sale is still nowhere near enough to keep up with demand and - in order for the market to function correctly - this imbalance urgently needs to be addressed."
Rics noted that the country is well behind in terms of the amount of properties needed to meet the rising demand.
"If we are to create a more sustainable market, it is critical that many more good quality homes are built in areas where people want to live," it added.