House price growth slowed in May as a raft of properties came on the market in order to avoid costs associated with the forthcoming introduction of home information packs (Hips), a new survey has revealed...

Of the estate agents and surveyors questioned by the Royal Institution of Chartered Surveyors (RICS) for its latest housing market study, 23.9 per cent more reported a rise than a fall in property prices over the month.

Despite signifying the 19th consecutive monthly rise in house prices, the balance marked a fall from the 28.5 per cent recorded for April's survey.

However while house price inflation slowed last month, the level of new buyer inquiries stabilised, a trend seized upon by RICS as evidence that May's interest rate hike has not yet dampened demand in the property market.

Bank of England policymakers increased the benchmark rate of borrowing to 5.5 per cent last month and analysts have speculated that the monetary policy committee may need to introduce further rises in order to combat inflation.

Demand still remains high

Nonetheless the RICS said demand for properties still remained high due to current "buoyant" economic conditions.

The supply of available housing stock also grew last month, with new instructions to sell property increasing at the fastest pace in the history of the organisation's survey.

Among charted surveyors 39 per cent more reported a rise, rather than a fall, in new instructions – up from 12 per cent in April.

RICS said surveyors reported that sellers had been listing their properties early in order to avoid the upfront cost of putting together an information pack for potential buyers under the government's Hips scheme – the introduction of which has now been delayed by ministers until August 1st.

But in a warning RICS spokesman Jeremy Leaf stressed that the full impact of rising interest rates had yet to be felt by the market.

"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market," he warned.

Source: Reuters