Spicerhaart boss Paul Smith has forecast that house prices will increase another 10% next year – with supply continuing to remain a big issue.

Smith said that house price inflation in London would be no more than 4% next year.

However, Savills is forecasting greater house price inflation in London than in the UK generally.

Smith also forecasts that rents will rise, as stock dwindles.

Smith said: “The top end of the property market, particularly in London, will see a price correction in 2016 because of the impact of Stamp Duty, consisting of a 10% drop in value for homes over £1m.

“However, this will have no bearing on the core property market, which will experience further average price increases in 2016 of up to 10% across the UK.

“On paper it will look like a tale of two countries as London will see an increase of around 3-4% due to the top-end market correction.

“There are around 29 buyers chasing every property listing and an abundance of mortgage providers, but the problem remains a lack of appropriate stock.

“Unless the Government takes drastic action to drive either private or public sector house building the situation is not likely to improve next year.

“The issue could develop into a serious social one if young people continue to be driven out of our major cities.

“This demographic is most likely to provide energy, vibrancy and new ways of thinking, so our major economic hubs like London are at real risk if property becomes unaffordable for all but the super-wealthy investors.

“The rental market will also be blighted by a lack of stock with families renting in cities needing to move out and commute in to their previous base in order to find something they can afford.

“We’ve seen no real evidence of a Northern Powerhouse emerging as yet, but people will be driven out of cities like London, Bristol and Cambridge to the regions as a direct result of lack of property stock and rising prices.”

Meanwhile, Savills is forecasting 5% house price rises across the UK next year, with 5.5% house price inflation in London.

The firm is also forecasting transaction levels of 1.2m this year.

Last week, in issuing a warning over profits, Countrywide said there had been a fall in house sales and that it expects transactions will be 950,000 this year.

In another forecast, property investment firm Assetz said UK house prices would grow 6% next year, but house price growth in London could turn negative.