A LACK of houses coming on to the property market has failed to stem the tide of prospective buyers looking for a new home, a report has found.

The supply of new homes coming onto the market in Scotland has remained lagging behind buyer demand, according to the latest survey of the market by the Royal Insitute of Charetered Surveyors in Scotland (RICS).

It warns of a knock on effect on house prices as properties increase in value because of the numbers chasing them. Overall, almost a third of chartered surveyors reported price increases last month.

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The market is also ­unaffected by a slowdown of available finance noticed elsewhere in the UK, where greater lending restrictions are beginning to impact on the market.

Surveyors said that the scaling back in the provision of mortgage finance in Scotland has been less marked than elsewhere with the average Loan to Value ratio in Scotland among first time buyers falling slightly to 86 per cent from 88 per cent in April.

Sarah Speirs, Director RICS Scotland, said: "The lack of supply teamed with continued growth in demand is resulting in higher prices across the country.

"There is some evidence to suggest that the Mortgage Market Review has contributed to a modest tightening of the funding market, despite this, the pattern looks set to continue in the short term, with a net balance of 32 per cent of respondents predicting an increase in sales during the next quarter."

The Scottish Housing Commission will publish its report on the Scottish housing market next month.