House prices in London continue to rise as demand grows and supply shrinks, according to a recent survey.

The latest Rics UK Residential Market Survey states that, while 40% more chartered surveyors saw prices rise in London in July, supply to the market continued to fall.

Around 16% more respondents reported a drop in new instructions and the shortage of housing worsened further in the capital during July, with the average number of properties for sale per surveyor in London slipping to its lowest since February 2014.

It isn’t just a London problem however, as the picture is mirrored across the UK, with areas such as East Anglia and Northern Ireland expected to have the biggest house price gains over the next 12 months.

Rising prices have not dampened interest, however, as new buyer enquiries rose for a fourth month in succession, with 36% of respondents reporting a rise in demand in London.

Rics’ head of policy Jeremy Blackburn said: “The Government has put home ownership at the very heart of its agenda, with starter homes and extending right-to-buy the strongest evidence of that ambition.

“However, this continues to be demand driven and fails to address the real issue of supply.

“A coherent and coordinated house building strategy is required across all tenures.

“This should include measures that will kick-start the supply side, such as mapping brownfield, addressing planning restrictions and creating a housing observatory to assess the underlying economic and social drivers of housing and provide the impetus for solutions.”

Rics’ chief economist Simon Rubinsohn said: “This trend could be brought to a halt when base rates do eventually begin to rise but the dovish tone to the latest Bank of England Inflation Report suggests the first move will come a little later than previously thought likely and that subsequent increases will be very gradual indeed.’’