HOUSE prices have continued to rise but the pace of increase has slowed in the South East, according to the latest housing market survey by the Royal Institution of Chartered Surveyors (RICS).

Interest rate hikes this year have dampened buyers’ moods, but the number of houses for sale remains low, putting upward pressure on prices.

Chartered surveyor estate agents reported a decline in the number of people looking for properties to buy, but surveyors expect sales activity to show a steady rise in the months ahead, although prices are predicted to remain stable.

The number of properties coming onto the market remains low and stocks of unsold properties on the survey respondents’ books fell in May to their lowest since August 1979. Completed property sales fell to 30 per agent for the quarter to May, down five per cent since February.

Speculation continues in the market place over whether buy-to-let investors will put their properties on the market, spurred on by fears of a housing market crash or large hikes in interest rates. Recent RICS lettings reports have found that the percentage of landlords selling-up at the end of a tenancy remains at around 11 or 12 per cent.

David Tuffin, RICS South East chairman, said: “We would expect the number of house sales to be down slightly in May because of the two Bank Holidays falling during this month quickly followed by school half-term.

“Nevertheless, heated speculation over interest rates has cooled buyer activity and last week’s rate rise confirms the upward trend is likely to dampen any further price surges. The number of unsold properties in estate agents’ windows is at its lowest since 1979.

“Some survey respondents, particularly in London, are saying that although they are conducting a lot of valuations, only a small percentage of properties are coming onto their books. This is causing aggressive fee cutting and over-valuing of properties to become commonplace as agents compete for business.

“The latest interest rate rise in June brings the cumulative increase since last November to one per cent. This should slow price rises in the latter half of the year, with surveyor confidence in the price outlook taking a knock.”