Residential property prices are set to rise sharply over the next few years, as the supply of housing coming onto the market continues to fall, according to the RICS UK Residential Market Survey for May.

The report shows that despite growing demand from buyers, the stock of homes per surveyor in May dropped to the lowest level since the data series started in January 1978, pushing home prices higher in the process, and at a quicker pace than in April.

34 per cent more surveyors saw prices increase in May as the supply of homes coming on to the market fell for the fourth month in succession with 19 per cent more surveyors reporting a decline in new instructions.

According to RICS, the average stock of residential property per surveyor has fallen by around 12 per cent since the start of 2015. Consequently, 38 per cent more surveyors expect to see property prices increase over the next three months, supported in part by the fact that new buyer enquiries rose at the fastest rate in over a year.

RICS Chief Economist Simon Rubinsohn (left) said, “There had been some hope that the removal of political uncertainty would encourage more properties onto the market but the initial indications are that this is not proving to be the case. As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable.”

Based on feedback received from the survey, RICS does not expect to see any meaningful boost to new housing supply put in place anytime soon, and as a consequence it is now forecasting that prices will appreciate by an average of 25 per cent over the next five years.

“Significantly, away from the South East, the strongest price growth is anticipated in the North West which is envisaged to benefit economically from the focus of the government on developing the ‘Northern Powerhouse’ centred on this area,” Rubinsohn added.

The findings from the latest RICS report is supported by new data from Rightmove showing that asking prices rose to an all-time high in June, up 3 per cent month-month, or almost £8,500, to an average of £294,351, boosted by what it described as ‘a near-instantaneous uplift in buyer demand and an unanticipated post-election drop in fresh property supply’.

Miles Shipside (right), Rightmove Director, commented, “Some buyers had been holding back in the weeks before the election, leading to some sellers suffering an unseasonal price standstill in the late spring. In particular, sentiment and prices got hit in the mooted Mansion Tax price brackets. Now the unexpected election outcome has caused a strong rebound, prompting an upturn in buyer demand and helping new seller asking prices to hit their highest ever levels.

“Agents report that the election surprise has given a boost to market sentiment, driven by more certainty about future economic and taxation policies. While would-be buyers have been able to respond quickly to these events, many potential sellers have so far failed to come to market. This has pushed up some of the asking prices of those properties that have been marketed, meaning that buyers are faced with paying a new average record price high for the more limited choice available. It could be said that this is the price of political certainty.”

Greater buyer activity is reflected by the fact that Rightmove had its busiest ever May, with 115 million visits to the website, exceeding May 2014 by 22 per cent. This is equivalent to every adult in the UK visiting Rightmove twice during the month. In addition, the busiest single day ever for visits on Rightmove was recorded on Tuesday 19thMay, as home-hunters took less than two weeks after the election to get back into their searching stride.

But this increase in demand has been met with a tightening in new supply, with the number of properties coming to market down 8.5 per cent on the same period a year ago.

Peter Woodthorpe, Director of Readings in Leicester, said: “While we’ve had even more prospective buyers come into the market after the election we haven’t seen an increase on the supply side.”