House prices rose last month at their slowest pace since June, indicating that demand for properties has cooled in response to higher borrowing costs, a study finds today.

Some 28 per cent more members of the Royal Institution of Chartered Surveyors (RICS) said that prices rose last month than fell. That was the weakest such balance in seven months.

Mervyn King, the Bank’s Governor, yesterday welcomed the “straws in the wind” that pointed to steadying prices. “One would like to see house price inflation moderate . . . so any softening would be a welcome development,” he said.

Interest rates, which rose three times between August and January, have taken the momentum out of a market which saw prices rise by almost 10 per cent last year.

However, average stocks of unsold property on surveyors’ books declined further to its lowest level since August 2004, in a sign of the tightness in supply which continues to shore up prices.

RICS said that the strongest house price growth was in London and the South of England, fuelled by the health of the financial services sector.

In Northern Ireland, prices continued to rocket, with a net balance of 95 per cent of surveyors reporting price rises.

Strength last year derived in part from the burgeoning buy-to-let market.

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