THE pace of house price growth in Worcester during August slowed at the fastest rate for two years.

The reasons, according to the RICS UK housing market survey, were recent interest rate increases, which led to a weakening demand for residential property.

After stabilising the previous month, house price inflation fell back last month with 48 per cent of chartered surveyors in the area reporting a fall in house prices, up 25 per cent from July. A further 46 per cent reported no change in prices, down 11 per cent on the previous month, while only seven per cent reported a rise. New-buyer enquiries declined for the second consecutive month and at the fastest pace since March 2003, with potential buyers remaining cautious as the effect of the interest rate cycle filters through. Stock levels within the region were also in decline for a second month.

Despite the unsettled market, surveyor confidence in the price and sales outlook improved slightly.

David Stuart-Smith, And-rew Grant, Worcester, and RICS West Midlands spokesperson, believes the market is actually more buoyant than the survey findings show. "August saw the expected seasonal reduction in activity but nevertheless there remains a good level of demand in Worcester, despite an increase in the supply of properties entering the market to beat the HIPs deadlines," he said. "The balance of supply to demand is still holding firm".

Richard Franklin, RICS West Midlands spokesperson and commercial director at Persimmon Homes, said: "The survey illustrates a cooling in the market locally, where a number of factors are underlying the findings."