Interest rate rises and the Bank of England’s recent warnings over market prospects have successfully applied the breaks on house price rises across Britain, according to the latest housing market survey from Royal Institution of Chartered Surveyors (RICS).

But a crash is not on the horizon, says the report.

Average house price inflation slowed in June to the slowest pace in ten months, according to chartered surveyor estate agents.

London and the South East recorded small prices falls for the first time since the Iraq war, and responses from the North of England seem to suggest the recent boom in these regions is coming to an end.

For the three months to June, 17 percent more surveyors reported a rise in house prices than a fall, compared to 43 percent in May and a long-run average of 24 percent.

Tight market conditions continue. The number of new properties coming onto the market and the amount of unsold properties on estate agents’ books both showed a moderate increase, although stock levels remain historically low.

The number of people looking to buy fell sharply in June in all regions, indicating that warnings from the Bank of England over market prospects is having a negative impact. The decline in the number of new buyer enquiries is the strongest recorded by RICS since March 2003, at the height of the uncertainty generated by the war in Iraq. However, at the end of last year and the beginning of 2004 the number of buyers on the market was particularly high.

Chartered surveyor estate agents’ confidence in price outlooks is fairly subdued for the next three months. They remain confident that the number of sales will remain fairly stable despite the drop in the number of buyers coming onto the market.

RICS housing spokesman, Ian Perry, says: “Two consecutive interest rate rises seem to be finally biting at the heels of the housing market.”

“We have seen a gradual reduction in the number of buyers coming onto the market and a marginal increase in the number of sellers, causing many estate agents to feel less optimistic about price rises, however tight market conditions remain.”

“Going forward, the housing market seems to be mirroring the wider economy – it may become less of a cycle of booms and busts and more a case of gentle rises and falls. The positive economic climate and growth in employment will provide a soft landing for future house price fluctuations.”