Property values are on the way down with house prices falling, according to the latest research from the Royal Institution of Chartered Surveyors (Rics).

The survey found that eight per cent of surveyors reported a fall, rather than a rise in house prices - the lowest reading since last July.

The fall has been attributed to a fall in demand and an increase in the number of homeowners looking to sell.

Regionally, the only areas which continued to see material price rises in the past month were London and the North West.

Demand for property, measured by the net balance of new buyer enquiries, fell for the second month in a row, from -6 to -10. The survey said that difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential homebuyers.

The number of new vendor instructions, which in effect measures the amount of properties coming to the market, increased, with a third more surveyors reporting a rise rather than a fall in properties to their books, an increase from 28 per cent in June - the highest reading since May 2007, a month before the initial planned introduction of Home Information Packs (HIPS). The Rics report suggested that more homeowners may be willing to test the property market, since HIPS were abolished in May.

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In keeping with the trend of increased supply to the market, the average number of properties on surveyors' books also rose by 4.1 per cent from June, taking the average to 69.1. Meanwhile, the average number of sales per surveyor stayed flat, at 16.6, a decrease of 0.1 per cent.

As a result, the sales to stock ratio fell to 24 per cent, the lowest level since last June. Newly agreed sales remain largely unchanged, with one per cent more surveyors reporting a rise than fall in the number of transactions, down from three per cent in June.

Looking forward, the Rics report said that expectations for house price increases have also turned negative, with 28 per cent more surveyors expecting prices to fall over the coming months, up from six per cent in June. Despite this, the report said that the sales expectations remain positive, with eight per cent more surveyors expecting sales to rise rather than fall, although this is down from the previous month.

Rics spokesperson Ian Perry said: "The fall in the Rics house price measure is broadly consistent with most other recent data that has been released. This is a reflection of both the increase in supply following the scrapping of HIPS and the more cautious stance from buyers.

"Significantly, the forward looking price expectations numbers suggest that this softer trend will continue through the second half of the year. However, agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties."

(KMcA/BMcC)