House price falls moderate

People view properties advertised for sale in the window of an estate agent in west London January 2, 2009.

LONDON (Reuters) - House prices in England and Wales continued to fall last month, a survey showed on Wednesday, but the pace of decline was the slowest in a year and sales volumes picked up from record low levels.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance rose to -73.1 in March from -78.1 in February.

The house price balance represents the difference between the percentage of surveyors reporting rising and falling house prices.

"There are tentative signs here of stronger housing activity. But, so far, any recovery does not seem to be strong enough to stop house prices falling," said Michael Saunders, an economist at Citi.

"As with other indicators, there are signs that the pace of recession is easing, but not yet signs that could genuinely qualify as recovery."

Optimism the pace of house price falls could be slowing was also dented by government data showing property prices fell an annual 12.3 percent in February after an 11.5 percent fall in January.

Figures from the Department of Communities and Local Government showed the three-month on three-month rate of decline also increased to 4.8 percent from 4.3 percent.

Figures from mortgage lenders suggest house prices have shed a fifth from their peak levels in 2007, plunging millions of Britons into negative equity.

Nevertheless, mortgage approvals have picked up from record lows hit at the end of last year and RICS said there were signs of greater housing market activity.

"The tentative signs of a pick-up in activity have become more broadly based over the past month," RICS said. "The higher level of buyer interest is feeding through into actual sales."

The survey showed 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.

New buyer inquiries have risen for five consecutive months, and are now growing at their fastest pace since September 2003, while the number of homes being offered to the market is falling, making surveyors' less gloomy about the next three months' price outlook.

"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," RICS said.

(Additional reporting by Christina Fincher)