More surveyors report rising prices but increasing lack of stock is still the main driver

Activity in the UK housing market has shown a marked improvement, the RICS' latest survey has revealed.

The seasonally adjusted net balance of surveyors reporting rising rather than falling house prices over the past three months turned positive in August, to 11%, compared with minus 6% in July. This is the highest result since May 2007.

The RICS said there were further signs that more vendors might be venturing back into the marketplace. A net balance of 12% of surveyors reported that new instructions increased in August, compared with 4% in July.

However, the pace of improvement in new buyer enquiries did slow somewhat last month. The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries fell from 61% in July to 49% in August.

Meanwhile, the sales-to-stock ratio – a measure of market slack and a lead indicator of future prices – continued to edge upwards. It has now risen for eight consecutive months and stands at 27 - its highest level since January, the RICS said.

RICS spokesperson Jeremy Leaf said: “Although it is clear that house prices are now rising, it continues to be the lack of supply that is underpinning the recovery in most parts of the country.

“The more positive news flow will gradually encourage vendors to start putting property back on the market,” he added. “This development should enable more potential purchasers to find desirable properties to buy but it could also present a challenge to the firmer trend in prices particularly when interest rates finally begin to move upwards.”