The housing report issued by the Royal Institute of Chartered Surveyors (RICS) today shows that while home sales continued to be weak in May, surveyor confidence in sales prospects was the highest in six months.

House prices dropped for the fourth consecutive month in May, though the pace of decline eased, representing the first improvement since the slowdown began last September. Whilst evidence for a recovery in housing activity is patchy, a number of indicators suggest that the market is poised for some relief in the months ahead.

The extent of falls in new buyer enquiries has lessened considerably from a low point reached back in March. Nationally, buyers remain cautious on the market, but the end of the war has led towards a stabilisation in demand.

More positive indications are also evident from surveyor expectations for the sales outlook, which rose to the highest level in six months.

Conditions in the market are still weak though, with completed sales of properties down 22% from year ago levels, compared to a 6% annual fall last December. Stocks of unsold properties have also risen further, reaching the highest level since September 2000. The easing of market conditions is still modest, with the ratio of current sales to unsold stocks at the long-run average of 37% in May, pointing to a fairly balanced market. And while surveyors are downbeat on future price movements, confidence has recovered to the highest level in five months.

Regional price trends remain similar to recent months, with house price rises sustained in northern regions of England into May, while price falls continued in all southern regions. However, the pace of decline eased slightly in both London and East Anglia. In terms of new buyer enquiries and surveyor confidence in the sales outlook, a relatively stronger picture has emerged in southern regions compared to elsewhere in the country.

RICS spokesman Ian Perry said, "The south continues to experience declining prices but despite this we are seeing confidence from London spreading out across the southern region."