December: Sellers had more pressing issues on their minds

The Royal Institution of Chartered Surveyors said the shortage was nearly at its most acute for a year.

Overall, 41% more surveyors reported price rises than price falls, citing the lack of homes for the rise.

The report also said there were signs that buyers were becoming discouraged, but added that surveyors were more optimistic about sales in the spring.

In December 30% more surveyors said they expected sales to increase rather than fall in the first quarter of 2004 - up from 23% in November.

Regional snapshot

House prices were accelerating in all regions of England and Wales except the West Midlands, Rics said.

Markets in the North, North West, Yorkshire and Humberside were "robust", it said.

About the Rics survey It reflects confidence in the market rather than prices. Three hundred surveyors and estate agents in England and Wales are asked if they feel prices are falling or rising House price surveys: A guide 2004 forecasts

The South East and East Midlands were lagging behind, but prices in London remained firm.

In December, fewer people put their properties on the market.

Following an initial spurt in the run-up to the Iraq war, it said, a fall in new properties being placed on the market was seen throughout 2003.

In December - traditionally a slow period for the housing market - 17% more chartered surveyors reported a fall in new instructions than a rise, compared with 15% in the previous month.

Ian Perry, Rics's housing spokesman, said the market's prospects looked good for 2004, even though he predicts some buyers may be put off by the prospect of higher interest rates.

"With a reported increase in the number of valuations taking place in the run-up to Christmas, everyone seems confident more property will come on to the market now," said Mr Perry.

"However, for the short-term at least, intense competition is likely to remain."