The pace of house price falls has eased to the slowest rate in four months according to the Royal Institution of Chartered Surveyors today.

Also, say the surveyors, the availability of property has edged down, indicating that market conditions have stopped deteriorating.

In RICS's housing market survey January 2005 surveyors report the number of new buyer enquiries showed no significant change for a third month running, having declined markedly through much of the second half of 2004.

Interest rate hikes in 2004 have worsened affordability conditions for buyers as mortgage costs have risen by a third in the past year. However, a firm economy, continued job creation and the belief that interest rates may have peaked has led to the first rise in agreed sales since April 2004, though sales at the completion stage were still static.

The upturn in activity suggests that buyer sentiment may have already passed a low point, though sales are still substantially below year ago levels. Surveyors have also reported a slight fall back in the stock of properties for sale, the first drop in eight months. However, a 16% rise in unsold properties in the past year has raised available supply, giving prospective buyers greater choice and bargaining power. As a result, mild price declines are still anticipated by surveyors in the months ahead.

House prices continued to ease back in most locations across the country, with declines still most prominent in southern England. Price falls in Northern England and the Midlands are generally similar to that of the previous month. In London, house prices were little changed for a second consecutive month whilst modest rises continue to persist in Scotland. Agreed sales have picked-up most notably in southern regions but were mainly lower elsewhere.