According to Capital Economics, the latest Royal Institute of Chartered Surveyors’ housing market survey presents mixed messages. Capital Economics says the housing market had clearly softened since the final quarter of 2006, but this rate has now slowed down.

For the fourth consecutive month, first-time buyer enquiries fell to -19% in February 2007, but it did increase in March to -8%. Despite the fact that the rate at which enquiries are falling slowed, the survey still points to a further fall in mortgage approvals.

In addition, price pressures have eased in all regions since interest rates began to rise in August 2006, but the pace still remains the fastest in London and the South East. By contrast, prices have fallen in each of the past three months in the East Midlands.

Ed Stansfield, property economist for Capital Economics, said: “The survey suggests that February’s weakness may have been exaggerated by the surprise timing of the January rate rise. With a further rise in borrowing costs still likely in May, however and financial markets beginning to consider the possibility that interest rates might rise to 5.75% in due course, buyer confidence should ease further in the months ahead and the housing market should continue to slow.”