HOUSE prices are falling at their steepest rate for nine years, says the latest RICS (Royal Institution of Chartered Surveyors) housing market survey.

The decline in prices is the biggest since 1995, and is a reaction to interest rates rising over the summer period - up three times in four months.

Despite this, it is unlikely that the housing market will experience a deep or prolonged downturn in prices as long as the economy remains stable.

Available properties are at the highest recorded level for almost a year, rising by 8% over the past three months. Around 30% more chartered surveyors reported a fall rather than a rise in house prices over the three months.

However, as supply to the market remains tight, stocks of unsold properties remain close to historical lows. Buyer enquires are down for the fifth consecutive month.

Looking ahead, surveyors predict a period of stagnation with sales activity levelling out. Northern England and Wales are static, with the housing boom clearly over.

Ian Perry, RICS national housing spokesperson, said: "The Bank of England is getting what it wanted. The housing market is slowing down with the economy, after consistent interest rate rises over the past year.

"The medicine is working. The slowdown is desirable from the point of view of market sustainability and may mean that further rate rises are unnecessary for the time being.

"While consumers keep confidence in job security and the economy we don't expect large price falls."

Richard Hair, President of the National Association of Estate Agents, added: "The market is clearly now showing signs of the correction that we have been predicting all year. "This month's reports from the estate agents at the frontline reveal that prices are indeed continuing to fall slightly and buyers are adopting a 'wait-and-see' attitude. Nevertheless there's plenty of new instructions and we should see the buyers start to move once they realise that a crash is a very unlikely prospect."