According to NAEA data, estate agents are registering five house hunters to every available property, yet the supply of properties has fallen.
The monthly market survey found that the average branch had 287 house hunters on its books in October, down slightly from 294 September.
This represented per branch 57 properties on its books in October, compared to 62 in September.
NAEA says this demand is pushing house prices up as the gap between asking and selling prices fell from 10.9 per cent in September to 8.8 per cent in October.
NAEA president Gary Smith says: “There is strong demand for property and more optimism in the housing market than we have seen for months. This is good news for the recovery of the market and for the UK economy in general.
“Many buyers are at the very beginning of the house buying process and this is creating a lack of properties in the short term. It is now up to the Government and the banks to do more to keep the momentum of market recovery going.”
Smith says a good place to start is for the Government to extend the stamp duty holiday, which is scheduled to end in December.
He says: “The danger is that this short-sighted policy could precipitate an unwelcome pause in the housing market at the start of the new year. We can only hope that common sense will prevail and that the Government will raise the lowest level at which stamp duty will apply to £175,000 for an indefinite period.”