Agents in parts of London and the South-East are running out of houses to sell.
According to the latest Hometrack report, there is a widening gap between supply and demand.
In London, over the last six months, demand has grown 15% while supply has shrunk by 0.6%.
Nationally, the number of sales agreed is outstripping the number of new properties coming on to the market: new supply has grown by 2.8% this month, while sales agreed were up 8.2%.
Scarcity of supply is pushing up house prices in London and the South – by 0.9% and 0.5% respectively over the last month. Prices across the rest of the country barely changed, rising by just 0.1%.
The Hometrack report says that the high cost of moving, uncertainty over jobs and a lack of available properties to move to, is putting people off from putting their own homes on the market.
However, while a shortage of supply is keeping pressure on prices, Hometrack warns that estate agents are over-valuing properties.
It says: “In an effort to secure instructions, a growing proportion of property is likely to come to the market at unrealistically high prices.
“This will lead to fewer sales and a period of price realignment – a continuation of a series of small ‘mini housing cycles’ which have been in evidence over recent years.”
Hometrack estimates that currently, the percentage of asking price achieved is just under 94%, the highest level for almost three years. The average length of time (8.8 weeks) it takes to agree a sale is also the lowest since July 2010. However, the national figure of time on the market is distorted by shorter times across London and the South (averaging 7.2 weeks) and longer times in the Midlands and Northern regions (averaging 11 weeks).
Richard Donnell, Hometrack’s director of research, said: “Respondents to the survey reported a lack of housing for sale as one of their greatest concerns in the market at present, with one reporting the lowest levels of stock for 15 years.”
London agent Peter Rollings, CEO of Marsh & Parsons, said: “The figures show the London property market continuing to operate in its own micro-climate, driving growth in UK house prices overall with consistently strong price increases.
“The figures demonstrate the huge demand for London property, with properties selling at twice the speed of the rest of the UK.
“We expect this to increase even further as both overseas and domestic buyers strive in competition for the best properties.
“We find at least 98% of the asking price is generally achieved on prime London properties, and in excess of the asking price in very high-demand areas such as south and south-west London.
“There is a general feel of optimism in the air with wider signs of economic recovery showing strong indicators of future growth prospects.”
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