House prices continued to decline in June, though at a slightly slower pace, said the Royal Institution of Chartered Surveyors today.

42% of chartered surveyors reported falls, down from May’s high of 46%.

Price falls have been reported across the country with the exception of Scotland, though even there, price rises have noticeably moderated. The rate of price declines has abated most notably in Northern England. In much of Southern England price falls deepened.

Completed property sales were static in June but are up almost 5% from a low reached in February. Sales are still down 25% from a year ago, reflecting a sharp drop-off in activity in the latter half of 2004. However, new purchase enquiries showed a modest rise in June, marking the first increase since January 2005, and the largest since January 2004.

The turnaround in buyer enquiries follows four consecutive months of falls. Increasing speculation that interest rates are about to fall may have partly shored-up the confidence of would-be buyers in June. However, the rise in enquiries is from a low base. The overall market has stabilised but conditions are subdued. At the same time, there has been a further increase in the volume of property brought to the market to sell. The stock of unsold property on the market has risen 29% from a year ago, but fallen back slightly in recent months.

The rising trend in vendor instructions will continue to place buyers in a position to bargain with sellers. As a result, surveyors envisage some price falls in the coming three month but pessimism with regards to the outlook has become less marked. The improvement in sentiment seems to reflect increased certainty that interest rates will not rise any further, and may even fall during late summer or autumn. However, slowing economic growth and a less robust jobs market will temper housing demand going into the second half of the year.