House prices 'could be starting to slow'

House price increased at their slowest rate since April 2006 in May, a new report suggests.

Reuters reports that a new study from the Royal Institution of Chartered Surveyors (Rics) found that the house prices balance fell to +23.9 in the quarter to the end of May. This compared to a three-month balance of +28.5 in April.

The Rics report backs up an earlier survey carried out in June by Hometrack. This company found that house prices increased by 0.6 per cent in May - compared to 0.7 per cent in the month before.

While the Bank of England decided to keep interest rates at 5.5 per cent earlier this month, many experts still think that rates could increase above six per cent before the end of the year.

"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market," Rics spokesman Jeremy Leaf told Reuters.

However, both Rics and Hometrack reported that more homes were being put up for sale in the month.

"Against this background of weakening demand there continues to be an increase in the volume of supply coming to the market," Richard Donnell, the director of research at Hometrack, reported.