House prices fall more slowly

LONDON (Reuters) - House prices in England and Wales fell at their slowest annual pace in almost two years last month while confidence in the price outlook turned positive for the first time since May 2007, a survey showed on Tuesday.

The Royal Institution of Chartered Surveyors' house price balance rose to -18.1 in the three months to June, its best reading since September 2007, from -43.8 in May. Analysts had forecast a much more modest improvement to -40.0.

New buyer inquiries increased for an eighth consecutive month and at their fastest rate since the survey began in 1999. At the same time, there were fewer homes being put up for sale.

The tightening in market conditions helped push the price expectations balance into positive territory for the first time since May 2007. That means more surveyors expect prices to rise over the next three months than expect them to fall.

The average stock of unsold property on surveyors' books fell to 56.9 from 58.5 in May to stand almost a third below the level at the same time last year.

The ratio of house sales versus stocks of unsold property rose to 22.3 from 20.0 -- the highest since March 2008.

"The June survey provides more evidence that activity in the housing market is recovering, albeit from historic lows," RICS said.

The findings echo other recent indicators in suggesting record-low interest rates may be helping to stabilise the housing market after price falls of around 20 percent over the past year.

However, there are still many obstacles on the horizon. Unemployment is rising and fixed mortgage rates leapt sharply last month as lenders braced for the likelihood of higher interest rates ahead.