The number of prospective buyers in the UK housing market has increased for the third consecutive month, according to the Rics Residential Market Survey.
The survey of chartered surveyors showed 13 per cent reported an increase in new buyer enquiries rather than a fall.
However, the survey showed supply shortages are leading to only a modest growth in sales activity and there has been a further decline in the amount of homes for sale.
For this reason surveyors expect the beginning of 2017 to be quiet reflecting the lack of fresh properties coming to market.
As stock continues to dwindle, the outlook for house price growth over the year to come is positive across the UK with a net balance of 40 per cent of respondents forecasting a rise.
But there is less confidence in the prospects for London property prices relative to other areas over the year to come with larger properties in the capital expected to show the slowest price growth.
Comments from respondents to the survey show that tax changes are still weighing heavily on the London market.
Simon Rubinsohn, chief economist at Rics, said: "A key issue for the housing market is the slowdown in transaction activity since the spring, which is clearly being reflected in the Rics agreed sales data as well as in official figures.
"Although there are some signs that the numbers may begin to edge upwards in the new year, the combination of macro-uncertainty, the ongoing supply shortfall, with stock levels around historic lows, and the myriad of tax changes impacting on buyers suggest that any pick-up in activity will be relatively modest."
