HOUSE prices could be set to inflate with few properties coming onto the market, surveyors have said.
The latest residential market survey from the Royal Institution of Chartered Surveyors (Rics) and Ulster Bank found activity increased last month despite limited supply.
It said the net balance of surveyors reporting newly agreed sales rising in in the north was higher than most of Britain.
And surveyors are expecting increasing activity over the coming year.
However, net balance fore new instructions were "remaining subdued" the report said with growing demand and limited supply "combining to push house price inflation higher".
There was a higher balance of Northern Ireland surveyors expecting house prices to rise than in most of Britain.
Rics Northern Ireland residential property spokesman Samuel Dickey said: The latest survey suggests strongly that the Northern Ireland housing market recovery continues; both in terms of activity and average prices. We know that the market is a mixed pictured in terms of geographical areas and property types, but the overall picture is one of momentum.
"There are economic challenges ahead which will likely act as headwinds for the housing market, but our view remains that prices will increase over the course of the year by some 4 per cent.
Ulster Bank's head of lending products Derek Wilson added: A range of indicators pointed to a muted first quarter of 2015, but the indications are that April and May have been stronger in terms of activity. Indeed, at Ulster Bank, our experience is that these have been robust months for mortgage demand, and that trend appears to be continuing into June.
"Our aim is offer choice to customers and to support them in making the financial decisions that are right for them. Thats why we have launched our biggest-ever range of mortgage options, with some of our lowest-ever rates, as well as a new seven-year fixed range.
In terms of prices, a net balance of 60 per cent of Northern Ireland surveyors said that prices rose in the past three months - the highest of all UK regions.
A net balance of 43 per cent said that they expected prices to continue rising in the three months ahead.
On newly agreed sales, a net balance of 35 per cent of local surveyors said that these rose in April, while a net balance of 8 per cent expect sales to increase in the three months ahead.
Meanwhile, a net balance of 3 per cent of surveyors said these increased, while a net balance of 27 per cent said that new buyer enquiries increased.
