Five times as many members of the Royal Institution of Chartered Surveyors (RICS) said prices rose in September than reported falls, compared to a ratio of four times in August.
That made September the 11th month in a row that the RICS members have reported increasing house prices.
According to the latest RICS housing market survey, price rises are being driven by a combination of would-be buyers returning to the market and the limited availability of property.
Price increases were again led by London and the South East, boosted by a booming city economy. Estate agents reported that gazumping is taking place amid prices in the capital rising at the fastest pace since January 2000.
Elsewhere, a ripple effect is taking place across the country with house prices in the North West and East Anglia picking up sharply, while Wales, Yorkshire and Humberside are also recorded price rises.
Optimism in price rises is at its highest since October 2004. However, surveyors expect a modest slowdown in sales activity as interest rates are expected to rise again.
Jeremy Leaf, a spokesperson for RICS, said: Greater economic activity has created a ripple effect in house prices across the country. With stocks of property low and buyer enquiries on the increase, sellers remain in poll position to benefit in the short term.
Continuing house price rises will make it difficult for the Bank of England to leave the base interest rate level at 4.75 per cent, unless the economy shows unexpected weakness. With affordability conditions for first-time buyers worsening, as price rises outstrip wages, higher interest rates will not help. However, a strong economy means that the housing market should see a soft landing in 2007.
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And it is first-time buyers that are feeling the pressure, with the majority now borrowing a record average of 3.27 times their annual incomes to get a mortgage.
According to the latest figures from the Council of Mortgage Lenders (CML), rising house prices have squeezed the finances of new buyers.
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In August last year the average first-time buyer borrowed just 3.08 times their income for a mortgage. The average amount borrowed now stands at £112,000 on an income of £34,469, with a typical 10% deposit.
Michael Coogan, Director General of CML, said: “Overall affordability has worsened a little, especially for first-time buyers.”
Despite this extra financial stress, the number of first-time buyers taking out mortgages has in fact risen over the past twelve months, from 34,900 in August 2005 to 38,100 in August this year.
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