House prices edged ahead for the third month in a row during October

House prices edged ahead for the third month in a row during October as the market continued to be supported by a shortage of properties for sale.

The average cost of a home in England and Wales rose by 0.2% during the month to £156,400, only 4.2% below its level 12 months ago, according to housing intelligence group Hometrack.

The average time a property took to sell continued to fall, dropping to 8.4 weeks, while there was also a further improvement in the proportion of their asking price that sellers are achieving, with this rising to 92.9%, up from a low of 88.3% in February.

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.