London house prices could rise by 11 per cent in 2014.

That’s according to the latest report from the Royal Institution of Chartered Surveyors (RICS) which says that increasing demand from would-be buyers coupled with a sluggish supply of homes coming onto the market is pushing up prices.

The RICS says house prices will rise by eight per cent across the country with the biggest rise of 11 per cent in the capital.

Peter Bolton King, RICS global residential director, said: “The cost of a house is now picking-up right across the country and next year should see more of the same.

“We expect all areas of the country to see prices increase, with London, predictably, recording the biggest rises. Mr Bolton King said the improving economic picture aside, this was largely down to the fact that buyer numbers considerably outweigh the amount of homes on the market. “While the number of new homes being built is now on the rise, it still won’t be anywhere near enough to meet demand, and we expect the problem of insufficient housing stock to be the main driver behind price increases over the next 12 months,” he explained. “With the shortage of homes coming onto the market – a key factor behind the price rises – some comfort may be drawn from a likely 20 per cent jump in new starts in England over the next year. “That would push the total towards the 155,000 mark compared to 125,000 this year and only around 100,000 in 2012. “While this is an encouraging trend, it is still insufficient to address the more rapid growth in population and will leave significant shortfalls in all tenures,” he added.

Landlords are also looking to 2014 with an increasing sense of optimism.

A survey by Paragon Mortgages of around 200 landlord customers, found that 38 per cent of them are feeling optimistic about the prospects for their portfolio.

During the second half of 2013, landlords’ optimism was at the highest level recorded. Those surveyed were also feeling positive about the value of their property investments with a third (33 per cent) expecting an increase in net value in 2014.

This has also been an upward trend, having dipped to an all-time low between 2008/2009 and remaining relatively flat through 2010 – 2012.

Just over a fifth of landlords are planning to invest in further buy-to-let property in the first quarter of 2014. Of those, landlords looking to buy, large-scale landlords were more likely to expect to purchase property (25 per cent) than small-scale landlords (8 per cent).

John Heron, director of mortgages, for Paragon said: “2013 was a good year for buy-to-let, and landlords certainly seem to be more active in the market. “We have seen a steady increase in the levels of optimism among our landlord customers, and this looks set to stay in the new year.

“We expect buy-to-let lending market-wide in 2013 to be in the region of £20 billion, and while this would represent a material level of growth over 2012 we should keep things in perspective.

“This only takes us back to the level of buy-to-let lending that we had 10 years ago, and over that period the private rented sector has increased by 80 per cent. Any talk of boom conditions in the buy-to-let market would appear to be premature indeed.”