High levels of migrants from central and eastern Europe have helped to push up rental prices in the UK, a new report claims.

Research by the Royal Institution of Chartered Surveyors (RICS) found that conditions for property investment remain strong, with steady economic growth and high levels of migration boosting yields and demand.

Demand for rental properties is currently at the highest level since 2001, as prices continue to force first-time buyers out of the market. A third more chartered surveyors (30 per cent) reported that rental yields rose during the three months to July 2006, up from just 20 per cent in the previous quarter.

Surveyors are confident that prices will remain high during the next quarter of the year, with 28 per cent predicting rental rises, compared with 24 per cent during the last three months.

RICS spokesman Jeremy Leaf commented: "Economic prosperity and population migration have increased rental demand, pushing up rents and making conditions better for property investors. However, first-time buyers will find it hard to enter the housing market with higher rents making it difficult to save sufficient sums for a deposit."

UK house prices are rising at a faster rate than salaries, leaving first-time buyers struggling to get a foot on the property ladder. However, mortgage approvals rose in June this year to a record £20.5 billion, according to the British Bankers' Association (BBA).

Official government figures show that almost 600,000 workers have entered the UK from the eight states that joined the European Union in 2004, with the largest number migrating from Poland.

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