Average house prices fell in the three months to November as the market showed little benefit from interest rate cuts, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (RICS).

The numbers of RICS members reporting falling prices outweighed by 18% those reporting rises, from just 10% a month ago.

In the South East and London, 40% to 50% of surveyors reported slight price falls, while in the Midlands 10% to 20% saw price declines.

In the North, the proportion was under 10%, but surveyors said a shortage of homes for sale kept a floor under prices.

The survey results are broadly in line with recent surveys by mortgage lenders such as Halifax which also found a downturn in the market.

However, while housing experts say there is no prospect of the market turning around in the short term, a downward spiral of early-90s proportions is not likely, as feared by some in the market recently.

Bleak 1999

RICS said there was "scant hope" of prices rising in the short term with recent cuts in home loan rates not expected to benefit the housing market until late 1999.

No early relief seen for sellers

RICS said the price falls could not simply put down to seasonal factors - the market quietening down over Christmas.

"Many respondents are noting the impact that job losses in local industries have had on the market. But several commentators express confidence that the continued fall in interest rates and likely further drops early in the new year will give the market a boost in 1999," said RICS spokesman Ian Perry.

Sales are now more than 10% down on a year ago, compared with falls of just 5% over the summer, the survey found.

Unemployment hits confidence

While home affordability is high, it appears not many potential buyers are confident enough to plunge into the market.

Phillip Cartwright from London and Country Mortgages told BBC Radio 4's Today programme that, at other times, interest rates as low as they are now would see the market going through the roof.

However, high unemployment and the general gloom over future job prospects has hit confidence hard, he said.

Mr Cartwright said he expected no change in the market in 1999, while the outlook beyond that was hard to assess.

Analysts believe lower interest rates will eventually bring buyers into the market.