Buyer enthusiasm continued to grow in March, with interest in London at a high not seen for nearly 10 years, while the key sales-to-stocks ratio rose for the fourth consecutive month.

Interest in the market increased for the fifth consecutive month. 31 percent more chartered surveyors reported a rise than a fall in new buyer enquiries - up from 21 percent in February. Interest is strong in every region, with London - at levels not seen since June 1999 - and Wales leading the way. The rise in interest reflects a drop in asking prices, continued interest rate cuts and a recent rise in mortgage approvals. As house prices fall, those with finance are now looking to do more than window-shop.

Further signs of improvement in activity indicators

Key points:

• New buyer enquiries rise for the fifth consecutive month leading to an increase in both newly agreed sales and sales expectations
• The sales to stock ratio edges upwards for the third successive month to stand at its best level since August 2008
• New instructions continue to decline resulting in inventory on estate agents books dropping to the lowest level since September 2007

The seasonally adjusted net balance of surveyors reporting falling rather than rising prices recorded a modest improvement in March but at 73.1, it remains deeply in negative territory. The latest reading was, however, the best outcome since February 2008.

Significantly, the tentative signs of a pick-up in activity have become more broadly based over the past month. New buyer enquiries have now increased for five consecutive months with the positive net balance in March climbing to its best level since September 2003.

More importantly, there is now clear evidence that the higher level of buyer interest is feeding through into actual sales. Newly agreed sales, measured on a net balance basis, rose over the month as did the average sales per surveyor series (for the first time since the tail end of 2007).

Meanwhile, the number of new instructions of residential property continues to decline albeit relatively modestly in March. This relentless fall in homes coming to the market (which dates back two years) is now becoming very visible in the diminishing stock of unsold property.

The latest data show average stocks per surveyor standing at just 66.7. This is the lowest number since September 2007 and almost 25% down on where they were a year ago.

The drop in the level of stocks on estate agents books coupled with the rise in sales has pushed the sales to stock ratio, a key guide to the future price trend, higher for the third successive month.

The latest reading of 14.6% is the best since August last year and compares with the low of 12.9% touched in December.

Confidence in both the sales and price outlook improved over the month. In the case of the former, the net balance of surveyors with a more positive view rose to 17.

This series has recorded a positive net balance in six out of the last seven months. On price expectations, the net balance still remains comfortably in negative territory but the reading of -55 is the least worst in more than a year and considerably better than the -88 net balance registered in January.

From a regional perspective, the net price balance improved in most parts of the country.

London, the South West and Scotland produced the most striking performances.

By way of contrast, East Anglia, the East Midlands and the North West saw a worsening in the net price balance. The negative price balance in Northern Ireland remained little changed from February reading.

The growth in new buyer enquiries increased most notably in London in March but Wales and the North also saw meaningful rises.

Source: RICS UK Housing Market Survey March 2009