The Royal Institute of Chartered Surveyors’ (RICS) UK housing market survey showed that house price inflation slowed in May, but buyer enquiries stabilised in spite of the latest interest rate rise.

House prices rose for the 19 th consecutive month in May but the rate of growth has slowed down by almost 5%. Almost 24% of chartered surveyors reported a rise rather than a fall in house prices, which is down from 28.5% in April 2007.

However, new buyer enquiries have stabilised in spite of the May interest rate hike, indicating that underlying demand conditions are still good. The effect that the current rate tightening cycle has had on new buyer enquiries has so far been quite limited with the absolute level of demand still high in light of buoyant economic conditions.

Jeremy Leaf, RICS spokesperson, said: “The stabilisation in buyer enquiries sends a clear signal that home buyers are undeterred by recent interest rate rises. However, the full impact of rising rates is yet to be felt and buyers tempted by the recent strength of house price rises may need to exercise caution. 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.
“Conditions in the market have loosened as sellers sought to avoid the upfront costs of the recently delayed Home Information Packs (HIPs). However, the surge in supply will be short lived, although owners of four bedroom properties may decide to enter the market before the next deadline on 1 August.”