UK house prices property 2017
Rics expects house prices to remain elevated due to a lack of supply in the market Reuters

House prices in the UK continued to rise in September even though interest from buyers was at its lowest level since last summer's EU referendum, according to a report.

The Royal Institution of Chartered Surveyors (Rics) said its house price balance was unchanged at +6, indicating a marginal increase in prices during the month.

This was despite 20% more surveyors reporting a fall rather than rise in demand from would-be buyers – the sixth straight month of negative reading and the weakest figure since July 2016.

Rics chief economist Simon Rubinsohn attributed the continued increase in house prices to a lack of supply in the market, with average stock levels on estate agents' books stuck near record-low levels at 43.3 during September.

"We are continuing to see evidence of shortage of stock both in the new build and second-hand market," he said.

"Against such a backdrop, prices in general are likely to remain elevated and indeed, as the survey indicates, continue to rise over the medium term in most parts of the country."

Some 15% more survey respondents reported a fall in sales volumes during September – the lowest reading since July 2016 – with Rics suggesting expectations of an interest rate rise from the Bank of England were contributing to a more cautious tone in market sentiment.

The report also found a disparity in house price growth between London and the south east of England – where prices fell in September – compared to the rest of the country, where prices are mostly on an upward trend.

"In part, this is a reflection of affordability constraints hitting the higher priced segments of the market," Rubinsohn said.

"It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years."

Data released by Halifax last week showed a 4% gain in UK house prices in the three months to September, the highest rate of growth recorded since February.