A lack of supply is still underpinning the house price recovery, says the Royal Institute of Chartered Surveyors (RICS) September housing market survey.

Significantly, the headline RICS house price balance recorded the highest figure since the onset of the credit crunch.

The net balance of Chartered Surveyors reporting rises rather than falls in house prices reached a positive reading of 22 in September, up from 10% in August - this is the highest result since May 2007, when the net balance was 25 percent.

The South of England is leading the upturn in prices with the net balance of surveyors reporting rises rather than falls for London and the South East climbing to 79% and 52% respectively. Elsewhere, Wales, Yorkshire and Humberside registered negative net balances of 15 and 18%.

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Meanwhile, transaction levels continued to improve in September with sales per surveyor rising to 18 over the past three months.

The pace of improvement in buyer interest slowed for the third consecutive month. The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries slipped from 4% in August to 36% in September. The number of surveyors reporting a rise in new buyer enquires in London dropped back from 71% to 45%.

RICS Spokesperson, Ian Perry said: "A lack of supply is still underpinning the rise in house prices with new instructions to estate agents only edging up very gradually. Meanwhile, despite the problems first-time buyers are continuing to encounter in securing finance, the level of enquiries from potential purchasers is increasing. This imbalance between demand and supply suggests that house prices will move higher in the near term."

(CD/KMcA)