AN ON-GOING shortage of properties for sale continues to fuel increasing house prices, according to a new survey by the Royal Institution of Chartered Surveyors.

However, with prices rising at their fastest rate for two and a half years, RICS South East chairman, David Tuffin, believes this growth rate is not sustainable.

He said: “The market is obviously still strong but chartered surveyors, in some areas, are reporting that overpricing is meeting resistance from buyers and this factor may well cool things down to a more sustainable rate of price increase.

“Many first-time buyers are finding it hard to step onto the property ladder because they are being put off by high prices, which are also the result of competition from the number of buy-to-let investors who are looking for property in the same sector of the market.”

He added: “However, rental levels in the letting market are beginning to decline and this should ease the competitive pressure and lead to further calming in the first-time sector.”

Most contributors to the survey reported price rises of between two and five per cent over the three month period to April.

The average number of properties on the books to each surveyor was 60, a sharp fall from the 67 of last month’s survey, which in turn was itself the lowest level since 1979.

Completed sales fell back only slightly this month. The average number of sales per surveyor dropped to 37, down one from last month. Despite this, sales are still at their strongest for 13 years.

Chartered surveyors contributing to the survey expect the upward movement of prices to continue although falling stocks and fewer new instructions are expected to hold back activity.

An increasing number of surveyors felt the actual number of sales would decline.

Buyer inquiries are also expected to be less active in coming months, but, given the recent strong position and the time of year, this does not represent a weakness in the market.