The latest RICS UK Housing Market shows that new instructions to sell residential property rose to the highest level for three years and this increase in supply is now impacting on sentiment.

According to RICS some 10% more chartered surveyors reported a rise than a fall in house prices, down from the 22% figure recorded in May. Surveyors are still reporting house price rises in most parts of the country, but the increase in supply is pushing many of the regional net balances towards negative territory. The most notable exceptions to this trend are London and Scotland.

Buyer interest fell for only the second time since October 2008 reflecting in part heightened uncertainty over the near term outlook for the UK economy. Some 5% more chartered surveyors reported a fall than a rise in new buyer enquires, down from 8% in May. This contrasts with a sustained rise in property supply.

RICS say that this latest increase in instructions to sell is partly a response to the recent decision to abolish HIPs in England and Wales.

The increase in supply has started to impact on surveyor sentiment towards house prices over the coming months; 4% of chartered surveyors now expect prices to fall which is down from a positive reading of 4%last month.

More positively, RICS believe that the larger number of properties coming to the market could bolster activity which has been depressed partly because of a lack of choice for home buyers. During June, the average number of completed sales remained static but the average number of stocks on surveyor’s books rose to 67.

RICS spokesperson, Jeremy Leaf said: “A shortage of stock has been one factor holding back transaction activity in the housing market but the abolition of HIPS is helping to belatedly address this issue. This is likely to be reflected in higher sales numbers over the coming months. However, with supply of property now beginning to outstrip demand there is a risk of some modest slippage in prices during the second half of the year.”