Rising mortgage rates following a series of base rate increases have dealt a blow to the housing market, according to a new report.

Confidence has fallen sharply in the south of England, with a big drop in the number of estate agents and chartered surveyors reporting price increases in the three months to the end of November.

The Royal Institution of Chartered Surveyors said 21% of estate agents and chartered surveyors reported house price rises, compared to 44% in November last year.

It said a north/south divide was appearing where the market was more robust in the north and beginning to slow in the south, in contrast to the usual picture.

The number of agents and surveyors predicting price increases has fallen most in the southeast, down to 19% last month from 44% in October, and in the southwest, down from 36% to 14%.

Ian Perry of RICS commented: "The cumulative effect of interest rate rises is beginning to make itself felt, added to which many homeowners are mindful of the annual adjustment for fixed rate mortgages due in January which will add to their monthly repayments.

"We can expect the effect of the mortgage interest relief reduction later in the year to dampen the market even further.

"These combined factors point to a more realistic approach to house buying in the New Year."

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