The UK housing market divided sharply last month with London the only region where surveyors reported falling prices.
As a fall in the number of houses coming on to the market pushed prices up across the rest of the country, the capital experienced declines for the sixth month in a row, according to the Royal Institution of Chartered Surveyors (RICS).
However, RICS suggested the falls would be temporary with surveyors expecting London prices to increase by 30% in the next five years.
The RICS monthly snapshot showed 8% more surveyors reported declines in new supply than had seen rises in February. New instructions have now fallen in six out of the last seven months.
While Northern Ireland and Scotland continue to outperform the rest of the UK, price growth picked up across the south west and the south-east.
Nationwide, price expectations for the next three months increased from a net balance of 3% to 10% expecting rises.
Despite some evidence suggesting that political uncertainty surrounding the May election could be holding back potential sellers, surveyors are now predicting nationwide house price growth of 2.4% over the next 12 months, up from 1.8% in January.
Notable exceptions to this trend are London, the north of England and the east Midlands, suggesting that political uncertainty may be weighing more heavily on certain areas.
Data from the Bank of England showed mortgage approvals rose for the second month in a row in January to hit a four-month high. Nationwide, the UK’s biggest building society, said house prices dipped 0.1% in February while a rival survey from Halifax showed a 0.3% drop.
RICS said after seven months of falling numbers of new buyers, demand now appeared to be stabilising in most areas as supply dipped.
But demand for rental properties continued to rise, while instructions to let remained unchanged following 10 months of steady declines. This was reflected in surveyors envisaging rents rising by 2.6% over the coming year.
RICS chief economist, Simon Rubinsohn, said: “It is encouraging that the negative trend in buyer inquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer, but more worrying that instructions to sell property continue to drop.
“This very modest reversal in the demand picture is already being felt in the key measures of price expectations highlighting the extent of the challenge policymakers will face in addressing the housing crisis in the aftermath of the coming general election.”
He said even in London there was a strong view that property would become more unaffordable over the medium term.
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