Uncertainty over the effect that higher interest rates are having on the housing market grew yesterday as signs that property prices are losing steam clashed with more upbeat reports.

House prices last month grew at their slowest pace since May, the Royal Institution of Chartered Surveyors (RICS) reported yesterday, after the fourth month in which the market has decelerated.

However, the lacklustre figures contrasted with a report last week from Halifax, the bank, which showed that average prices rose by 1.8 per cent in February — the sixth gain of more than 1 per cent in the past seven months.

They were also at odds with official figures published yesterday showing that prices rose by 10.9 per cent in the year to January, the fastest pace since March 2005. Those statistics, from the Department for Communities and Local Government, measure the price of homes at sale completion and are thus considered to be a backward-looking indicator.

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The RICS figures are consistent with a market that is absorbing the impact of higher rates, which have risen three times since August, to 5.25 per cent.

The institution said that 24 per cent more chartered surveyors reported a rise in house prices than reported a fall in February, a figure above the long-term average of 21.6 per cent but down from the 28 per cent that was recorded in January.

The picture was the worst in the East Midlands, where house prices fell for the second successive month, the report showed. Prices were stagnant in the West Midlands.

The market remained strong in London, where 50 per cent more surveyors reported a rise in prices than a fall, but that compared with a peak of 80 per cent last October. The picture was similar across the South East.

The report said that higher interest rates had made buyers less confident. Some 19 per cent more surveyors reported a fall in new buyer inquiries than reported a rise last month, compared with a figure of 6 per cent the previous month.

Nonetheless, the market continues to be supported by extremely tight supply conditions. New instructions to sell property have gone for nine months without a rise, the longest stretch in seven years, the RICS said.

Stocks of unsold property have fallen, and the ratio of completed sales compared with the stock of available property on the market rose to 47 per cent — the tightest market conditions since June 2004.

A report by Hamptons International, the estate agent, said that supply and demand have become so out of balance that there is now an average of eight buyers for every seller of property.

In London the stock of available houses is down by 50 per cent from last year, while buyer numbers have risen by 37 per cent, the estate agent said.

In 2004, Kate Barker’s review of housing supply argued that an additional 70,000 houses each year in England would be required in order to bring house price inflation in line with the wider economy. Georgian homes are the most popular type of property among homebuyers, but also the most scarce, a survey by propertyfinder.com has found. Respondents said that the types of home they liked the least were those built between 1950 and 1980, even though those were the cheapest.

Bovis lifts its profit by 13%

Bovis Homes Group, the housebuilder, yesterday reported a 4.7 per cent rise in the average price of its homes in 2006 to £183,700, against £175,500 in 2005 (Elizabeth Colman writes).

Bovis reported a 15 per cent rise in overall volume of sales and a 13.7 per cent rise in pretax profits to £132 million for the year. A transition from building five-bedroom homes to dwellings with one or two bedrooms, for which there was higher demand, contributed to the sales rise.

Malcolm Harris, the chief executive, said that buyers appeared more cautious in December and January as a result of recent interest rate rises, adding that the full effect would not be seen for three to six months.

Mr Harris flagged a possible deal if Bovis “could buy a business on the right terms”.

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