The average time a house in the capital spends on the market has fallen to 4.6 weeks – a level last seen in 2007. London house prices increased 0.7% in April.

Demand for properties outside the capital rose for the third month in a row and prices rose by 0.3% overall.

Hometrack director of research Richard Donnell said: “House prices posted another strong gain in April increasing by 0.3%, following a similar increase in March.

“Improved market sentiment and a lack of supply for sale are key features of the market, providing support to underlying pricing levels across the country.

“The news of a rise in economic growth over the first quarter along with government measures to support housing is likely to boost market sentiment further over the coming months.”

April saw a 3.1% increase in the number of new buyers registering but only a 2.8% increase in the number of homes coming to the market.

The time properties spend on the market has fallen by almost a week since the beginning of the year, from 9.9 weeks in January to 9.1 weeks in April.

After two months where sales agreed rose by double figures, growth has slowed slightly but still remained high at 7.1%.