A ‘depressed’ flow of new instructions is both holding back activity in the housing market and driving prices to new highs, says the Royal Institution of Chartered Surveyors.

In its latest residential market survey, Rics shows the new instruction series net balance at -20%, with average stock levels dropping from 42 to March to 37 in October per estate agent book.

This marks the seventh month in a row that this metric has read negative.

As a result, sales momentum, despite new buyer enquiries rising, has a net balance of -9%, a negative reading for the fourth month in a row.

However, for the next three months, survey respondents are more positive, giving a net balance of 10% and, for the next 12 months, a more modest net balance of 4%.

A second result of the low number of new instructions, Rics says, is that a net balance of 70% of survey participants saw an increase in house prices, with a sharp rise taking place in “virtually all regions [and] countries of the UK”.

And in the next 12 months, a net balance of 69% of respondents believe house prices will continue to rise, “with this measure showing no sign of erasing over recent months.”

Regarding lettings, tenant demand continues to be high, having risen in the last six quarters and landlord instructions have fallen, with a net balance of -31% being reported.

As with the sales market, this supply and demand mismatch, Rics says, means near term rental growth expectations are high and, “interestingly, London now displays amongst the strongest expectations on this measure… a substantial turnaround.”

Rics reports that it added extra questions dealing with environmental issues to this survey.

It describes an increase in interest in energy efficient homes, but this has not translated into actual demand.

“Furthermore,” the report states, “the majority of professionals surveyed (around 54%) state that a property’s energy efficiency rating has “very little impact” on its selling price.

“Meanwhile, around 23% believe that energy efficiency rating has no impact on the selling price whatsoever.”

Rics chief economist Simon Rubinsohn says: “Although the mood music around interest rates does appear to be shifting, for now the stronger influence on the housing market is the ongoing imbalance between demand and supply.

The report does add, though, that nearly three-quarters of those surveyed on this question believe that a willingness to pay a premium for more energy efficient homes will rise over the next three years.

“The inventory on agents’ books appears to have slipped back towards historic lows and this seems to be underpinning both the current price trend and expectations for the next year.

“Meanwhile, although there is likely to some drop in activity in the immediate aftermath of the expiry of the stamp duty break, most activity indicators currently remain solid. Indeed, the main challenge for buyers looking forward may once again be a lack of choice of property on the market.

“As long as there is a lack of choice for would-be buyers, it is clear that buyers ambition to be more climate friendly will have to move down their list of priorities.

“The data from today’s report suggests that additional government funding and investment alongside new financial solutions appealing to homeowners, landlords and investors could pave the way for decarbonising UK homes.”