House prices in June fell at their slowest rate since February as the number of people looking to buy a new home rose for the first time in five months, figures showed today.

The Royal Institution of Chartered Surveyors (RICS) said the property market was showing some signs of stabilising as confidence returned following the end of the war in Iraq.

During June, 12 per cent more chartered surveyors in England and Wales reported seeing house price falls than those who said there had been rises, well down on the 26 per cent who reported falls in May.

Around ten per cent more surveyors also said they had seen a rise in the number of new enquires from potential buyers than those who saw a fall - the highest figure since April 2002.

But at the same time the number of properties sold fell to its lowest level for two and a half years, although the rate of decline slowed with sales dropping by five per cent during the second quarter of the year, compared with a 12 per cent fall during the first quarter.

This left estate agent chartered surveyors with an average of 78 unsold properties on their books each, the highest level since September 2000, and 34 per cent higher than this time last year.

RICS said the pace of price falls had eased back in southern regions during the month, particularly in the South-East and South-West, while prices continued to rise in northern regions and Wales.