The net balance of RICS members recording price rises rather than falls hit 34% in October, up from 20% in September and its highest result since December 2006.

London is at the forefront of the recovery with the net balance of surveyors in the capital reporting rises rather than falls in the capital climbing to 95%. All regions reported a rise in instructions for the first time since the onset of the credit crunch.

Transaction levels continued to increase with the average sale per surveyor reaching 19 over the past three months. Sales to stock ratio – usually a reliable indicator of future prices – climbed for the 10th consecutive month.

On the downside, improvement in buyer interest slowed for the fourth consecutive month. Surveyors reporting an increase in new buyer enquiries slipped from 35% in September to 31%.

Jeremy Leaf, a spokesman for RICS, said:

“Although the supply of property is beginning to pickup, it is still insufficient to keep pace with the increase in demand which points to further prices gains in the near term.”

RICS agents admit that property prices are currently being underpinned by a lack of supply of property for sale, as worried homeowners are sitting tight and not moving duue to the recession.

Mark Everett, a RICS member based in Epsom, Surrey, said:

“A dire shortage of instructions is slowing the market dramatically. Prices remain propped up as a result.”

And Peter Haynes, a RICS member based in Cobham, Surrey, said:

“There is a lack of property on the market. Values rose in the summer but may fall back this winter.”

Some economists have also warned that the dismal economic outlook could cause another dip in prices next year, compounded by an increase in the number of properties coming to the market for sale, which will have its own dampening effect.

Howard Archer, an economist at Global Insight, said:

“House prices will probably keep rising in the next few months but are likely to suffer a relapse next year in the face of higher and still rising unemployment, muted earnings growth and the recent worsening in affordability due to house prices rising from their early-2009 lows.

“A relapse in house prices will be even more likely if the recent firming trend leads to more properties coming onto the market.”