A shortage of properties in the market continued to drive up house prices for the third successive month during October, new data shows.

Average home value in England and Wales stood at £156,400, rising by 0.2% during the month, according to housing intelligence group Hometrack which noted that the figure is only 4.2% below its level during the same period last year.

The proportion of asking prices that home sellers managed to achieve had gone up from February's low of 88.3%, to 92.9%.

The average time taken for a property to sell also continued to drop, reaching 8.4 weeks in October.

Richard Donnell, Hometrack's director of research, said: "The past six months have seen a continued improvement in housing market sentiment on the back of rising demand and a lack of housing for sale.

"Prices have firmed and the discount between sales and asking prices is back to the same level it was at the start of the credit crunch over two years ago.

"However, what is becoming increasingly clear from recent Hometrack surveys is a marked slowdown in the rate of growth in the volume of new buyers registering with agents."

He warned that this suggested the pent-up demand that had boosted the market in recent months was starting to fade in the face of higher prices.

During the spring and early summer, estate agents reported that registrations from potential new buyers were rising by an average of 7.5% a month.

But during the past three months, new buyer registrations have edged up by an average of just 1.1% a month.

The group said that while the number of potential buyers agents had on their books was far healthier than six months ago, slower growth in demand could reduce the upward pressure on prices during the coming months.

Mr Donnell said: "Prices over October may have risen, but these rises were registered across just 16% of the market. Across the remaining 84% of the country, prices remained static."

He added that the majority of the recent price rises had been seen in London, with the cost of property in Greater London rising by 0.4% during October - double the next biggest increase of 0.2% in the South East and North West.

Prices in London have risen by 1.1% during the past three months, compared with a rise of only 0.5% across England and Wales as a whole during the same period.

Last week Nationwide said annual house price inflation had turned positive for the first time since March 2008.

The group said prices were 2% higher during October than they had been a year earlier, following a 0.4% increase during the month itself.

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