House price falls ease but market bleak

House price falls eased slightly in June, but market conditions remain bleak with sentiment near record lows, according to a survey on Tuesday.

The Royal Institution of Chartered Surveyors said its house price balance - which measures the balance of property surveyors reporting falls and rises in prices - rose to -88.0 in the three months to June from -92.2 in May.

Analysts had expected a reading of -93.8 but the balance is only slightly above the 30-year low hit in April of -94.2 and is likely to add to concerns about the future health of an already sharply weakening housing market.

The ratio of sales to stocks of unsold property - often cited by economists as a more reliable gauge of the health of the market - fell to 18.2 percent from 19.4 percent in the three months to May.

That was the weakest reading since October 1995.

"Transaction levels remain incredibly low with many buyers cut out of the process by tight lending conditions," said RICS spokesman Jeremy Leaf.

The figures add to a raft of gloomy housing market surveys which have fuelled fears of a crash and raised expectations that the Bank might have to lower interest rates to stave off a recession in the wake of the credit crunch.

The lending squeeze has hit the property market hard as banks get tough on would-be home buyers by giving mortgage loans stricter terms and making them more expensive.

Figures from the Bank show two-year fixed-rate mortgages at their most costly in more than eight years.

At the same time, wage rises have remained muted despite inflation running at its strongest rate in more than a decade - squeezing disposable incomes and making it even harder for first-time buyers to get a foot on the property ladder.