Increase in new buyer activity

The turnaround in new buyer enquiries, after four months of falls, suggests that confidence has been boosted by increasing speculation that interest rates will fall. However, the rise in activity is from a low base, with overall market conditions still subdued.

House prices continue to decline in June, though at a slightly slower pace, with 42% of chartered surveyors reporting falls, down from last month's high of 46%.

Completed sales levels remain unchanged but are up by almost 5% from February's low. However, they remain 25% lower than this time last year, reflecting the sharp fall in activity at the end of 2004.

This month also sees a rise in property on the market, though at the slowest pace of increase since January. Selling instructions are still rising, ensuring buyers maintain their strong bargaining position. This has led surveyors to predict further price falls in the coming months, though their overall outlook is at its most optimistic in seven months.

Prices are falling across the country, with the exception of Scotland which is still seeing very slight price rises. The rate of price falls has abated in half of all regions, most notably in Northern England. Price falls steepened in much of Southern England, including London and the South East.

According to RICS national housing market spokesperson, Ian Perry: "A revival in buyer interest has been recorded across the country in June, but has come against a background of still quite subdued market conditions.

"The clear signs of a broad base economic slowdown will mean housing demand will remain low for the rest of the year. RICS believes a modest interest rate cut is now warranted to prevent any further deterioration of the economy. "