UK house prices fell further in December, but at the slowest pace in three months according to the Royal Institution of Chartered Surveyors (RICS)’ monthly housing survey published today.

This stability is based on expectations that interest rates have peaked. Completed property sales and buyer purchase enquiries showed little change in December, having declined markedly during the summer and autumn months. 37 percent more chartered surveyors report a fall in house prices than a rise in December, compared to a revised 46 percent reporting a decline in November.

December’s completed sales are equal to November’s and mark the first time in nine months sales have not fallen, though sales volumes are 30 percent lower than the same time last year and still point to a lacklustre market following four interest rate increases in 2004.

The flow of available property coming onto the market continues to rise and the increase in new instructions has resulted in higher levels of unsold property on surveyors’ books. These hit a 1½ year high in December and have risen 17% over the past year.

Surveyor confidence in price prospects for the next three months remains subdued with further moderate price falls predicted.

Almost all regions report a drop in agreed sale prices. Southern England and the Midlands see the most significant declines, with London prices little changed, indicating that the market’s downturn is likely to have bottomed out. Only in Scotland are prices still rising, but at a significantly reduced rate compared to last summer.

RICS spokesperson, Ian Perry comments: "Speculation that interest rates have peaked seems to have given encouragement to buyers during a period which is traditionally quite weak."

"With the economy sustaining moderate growth, the conditions for a mild pick-up in the housing market are in place for 2005, though any further significant rise in interest rates will knock back confidence."

RICS forecasts a modest recovery in house prices across the country and that steady interest rates and a favourable economic backdrop will lead to a 3% rise in prices in 2005.