An interesting report out this week from the Royal Institute for Chartered Surveyors (Rics) suggests that house prices are still being driven up by a relative shortage of properties for sale.

 Its latest monthly survey, for November, suggests that prices have risen for the fourth month in a row.

 The number of surveyors reporting price rises outstripped those reporting falls, with a positive balance of 35%. Separate government figures showed that UK house prices rose by 2.3% in the three months to October.

 Rics carries out its assessment of the state of the market by asking its members a series of questions about prices, supply and demand.

 It said the latest figures were the strongest reading since November 2006 and said the trend was likely to continue.

 ”For the fourth month in a row, the survey points towards prices rising, even though the general state of the economy would suggest that the housing market should not be faring as well as it is,” said a Rics spokesman.

 Despite modest increases in the number of properties coming on to the market, it is clear that this is not significant enough to keep pace with the levels of demand. Buyer enquiries are continuing to grow and with the pace of job losses now easing, the risk is that the New Year could see a further wave of interest in the market.

 New instructions to sell have risen for six consecutive months, but they have been outstripped by extra enquiries from potential new buyers.

 The proportion of surveyors reporting an increase in new sellers instructions outweighed those reporting a fall, by 18%.

 But the balance in favour of those reporting more enquiries from potential new buyers was much stronger at 28%, although this was down a bit from the 30% balance recorded the previous month in October.

 Once again prices seem to be rising fastest in London and the South-East of England.

 In a separate survey, figures from the Department for Communities and Local Government showed that UK house prices were 2.2% lower in October than the same month a year earlier, but 0.5% higher than in September 2009.

 This pushed up the price of the average UK home to £198,450.

 The uplift in prices has pushed the annual change in Scotland into positive territory. Year-on-year prices rose by 0.7% in Scotland, compared with falls of 2.1% in England, 4.5% in Wales, and 14.8% in Northern Ireland.

 Annual average house prices paid by first-time buyers in October 2009 were 0.1% lower than a year ago. However, average house prices paid by former owner-occupiers were 3% lower.

 Prices are likely to remain stable in 2010, especially prior to the general election, when caution will remain the watchword. Many financial markets will remain jittery until a Conservative victory is certain. Some properties, however, will continue to defy market conditions and sell well, in many cases at 2007 levels.

The number of mortgages granted to house buyers hit a 22-month high in October, according to the Council of Mortgage Lenders (CML). It said 55,300 mortgages were granted to buyers, the highest number since December 2007.  

This was a 9% increase from September and up 43% from October last year. The CML said mortgage lending to buyers had now doubled since its low point in January this year, but remortgaging was still very subdued.  

It appears that low interest rates for those with substantial deposits, coupled with this year’s sustained increases in house prices, are encouraging more people to buy or move home. 

But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans. 

First-time buyers are still having to put down average deposits of 25%, the CML’s figures show, despite a gentle easing of the industry’s mortgage rationing in the past few months.  

There has been a significant increase in the number of mortgages available up to 80%, 85% and even 90% loan-to-value. Furthermore the additional competition in this sector of the market has pushed some rates and some arrangement fees lower. 

The number of mortgages approved, but not yet lent, picked up again in September and October after reaching a plateau during the summer months.  

The recent data, from the Bank of England, suggests that mortgage lending and sales are likely to continue rising in the coming months.  

The slump in sales and prices during 2008 was the sharpest since the economic depression of the 1930s. But after reaching a nadir at the turn of the year, both sales and prices have been on an upward trend.  

This has taken most observers by surprise, but many think that while sales may continue rising next year, prices are likely to flatten out.