However, the RICS survey also found an increase in buyer enquiries, strengthening prices in London and the South East, and improved confidence levels among chartered surveyors. Buyer enquiries have risen for the first time since January this year: And property prices, although weak during the spring months, are showing signs of hardening. Only 12% more surveyors reporting a fall in house prices than a rise for the three months to June, against 26% reporting a fall in the three months to May 2003.

RICS housing spokesman Ian Perry said: "Surveyors are still feeling confident of a rebound in the market based on low interest rates and steady labour market. In London in particular, some of this increased confidence over the last three to four months may be down to a recovery in the stock market and less instability in the City job market. The share price recovery may also have helped to stabilise demand across other southern markets as well."