A lack of property on the market has driven up house prices for the fifteenth consecutive month, despite cooling demand, said the RICS UK housing market survey.

House prices rose for the fifteenth consecutive month in January but the pace of increase eased back to June levels. 28% more Chartered Surveyors reported a rise than a fall in house prices, down from 36.6% in December.

Although the balance is reduced, the pace of increases remains above the long run average of 21% as tight supply conditions have helped the market shrug off interest rate rises. The number of unsold properties on surveyors’ books declined to the lowest level since August 2004.

Demand cooled in January as new buyer enquiries were held back by the recent interest rate rises though the fall has occurred from a high base, and therefore fundamentally strong.

New buyer enquiries are likely to weaken further in the coming months as the January interest rate rise filters through to a further deterioration in buyer affordability.

Completed property sales rose to 29.8 per surveyor (up from 27.3 in October) – the highest since May 2004. 

The ratio of completed sales compared to the stock of available property rose to 46.2% from 43.1%, almost ten percentage points higher than the survey’s long run average.

The strongest house price growth was once again in London and the South of England fuelled by an ever booming financial services sector. In the North and the Midlands, price rises have slowed markedly, while housing markets in Scotland and Northern Ireland remain robust.

Surveyor confidence in price outlooks are still strong, as tight supply conditions continue to boost optimism.

RICS spokesman Jeremy Leaf said: "Interest rate rises are having the desired impact of stabilising the market. The Bank of England’s hawkish activity has deterred some buyers who have started to hesitate before taking the property ladder plunge."

"However, a strong economy provides a platform for modest house price rises particularly as would be buyers face an ever diminishing choice of property on the market.”

"Higher interest rates will make life more difficult with arrears expected to rise, though there few signs that the market will take a significant turn for the worst."