House price growth eased in June to half the pace of the previous month and demand weakened due to the impact of rate hikes, says the RICS UK Housing Market Survey.

House prices rose for the 20th consecutive month in June but the rate of growth more than halved, falling below the survey’s long run average of 21.6%. 10.6% more Chartered Surveyors reported a rise than a fall in house prices, down from 22.5% in May.

In England, London remains the region with the strongest price rises but Scotland is equally as buoyant. Northern Ireland continues to lead the way as the peace premium remains a boost to price growth.

New buyer enquires declined at the fastest pace since February 2006 as the interest rate cycle began to weigh heavily on first time buyer affordability. 15% more Chartered Surveyors reported a fall than a rise in new buyer enquiries compared to 2% in May. New buyer enquiries fell across all regions, except for Wales, the West Midlands and Scotland.

New instructions to sell property fell sharply. Many vendors brought forward their instructions into May, in order to avoid the upfront cost of Home Information Packs. 27% more Chartered Surveyors reported a rise in new instructions down from 41% in May.

The ratio of completed sales to the stock of available property on the market fell for the third consecutive month indicating that market conditions continue to loosen.

Four interest rate rises and the prospect of more to come have dented surveyor confidence in the house price outlook. Surveyor confidence in the sales outlook almost halved , falling to the lowest level since June 2004.

RICS spokesman Ian Perry said:

"House prices have finally started to cool significantly for the first time since the recent mini-boom in the housing market got underway in 2006.

"Interest rate hikes have begun to affect the psychology of the market with potential new buyers starting to think twice before buying a home.

"The July rate increase may not mark the peak of the current interest rate cycle and earlier rate rises have yet to fully filter through.

A softer landing for the housing market is in store as we move into the autumn."

Source: RICS