The upward pressure on house prices is poised to "build rapidly" in the coming months as the gap between demand from buyers and the supply of homes to choose from is at its widest in four years, property analyst Hometrack has reported.
House prices rose by 0.3% in January and are 4.8% higher than a year ago, despite activity normally quietening down over the winter months.
Hometrack said the supply of homes for sale decreased by 6.6% in January and has been shrinking over the last five months in a row, declining by a total of 17%.
Meanwhile, the number of new buyers registering with estate agents saw a slower decline than the contraction in the supply of homes in January, with a 4.4% drop.
Hometrack said that the imbalance between supply and demand is at its widest level since 2009 and the scale of house price increases in the coming months now hinges on the willingness of new sellers to come to market.
Richard Donnell, director of research at Hometrack, said: "We expect supply to register a seasonal increase in the coming months but the general trend over 2013 was supply failing to keep pace with demand and putting extra pressure on prices.
"If sellers remain slow or reluctant to enter the market, in expectation of further price gains, then the upward pressure on prices will build rapidly once again."
Across England and Wales, no region saw prices fall month-on-month in January, according to Hometrack's figures. Prices were unchanged in the East Midlands and the North East, while they rose by 0.1% in Wales and Yorkshire and Humberside, by 0.2% in the West Midlands, the North West and the South East, by 0.4% in East Anglia and the South West and by 0.6% in London.
Hometrack said that while London has been "the engine of growth", there is also evidence of confidence in the housing market spreading elsewhere. Places that saw above-average price growth in January included Dorset at 0.9%, Cambridgeshire and Northamptonshire, both at 0.7%, and Devon and Essex, both at 0.6%.
A new phase of the Government's flagship Help to Buy scheme was launched in October to offer state-backed mortgages to people with deposits as low as 5% and the number of mortgages on the market for people in this borrowing bracket has tripled since the initiative got under way. Last week, the Bank of England reported that the number of mortgage approvals granted to home buyers reached a six-year high in December.
Critics of Help to Buy argue that instead of pumping more demand into the housing market, which they say is fuelling the upward movement in prices and encouraging people to stretch their borrowing, the Government should instead be concentrating on increasing supply.
While Help to Buy has encouraged more first-time buyers into the market, it also erodes the supply of properties as, unlike home movers, this group of buyers do not bring any fresh houses on to the market with them.
Hometrack estimates that first-time buyers and property investors currently account for two-fifths (40%) of housing sales.
Mr Donnell continued: "Supply will only improve through more existing home owners putting their property on the market, investors looking to capitalise on recent price gains and an increase in new supply from builders."
Hometrack said that on average, house sellers are shaving less than 5% off their asking prices to make a transaction, compared with the typical 7% discount that was given a year ago.
Houses now take eight weeks to sell typically, down from 10 weeks on average this time last year. In London, properties are now spending less than three weeks on the market on average before they sell.
Mr Donnell added: "Positive news on the economy and jobs is set to support demand in the coming months. Continued low mortgage rates mean that households with access to equity have significant buying power in the market and this will support the impetus for continued price increases in the months ahead."