The rapid head of steam that has been built up in the London housing market is “fading rapidly” as house prices and the number of enquiries slow.

The Royal Institution of Chartered Surveyors' (Rics) July survey reported that in London, where house price growth has previously been particularly fierce, enquiries are falling at their fastest rate since 2008, sales are also in decline and price momentum is fading.

The report shows further signs that the property market is cooling down have been reported by surveyors, who said the number of people looking for new homes has fallen back for the first time in a year and a half.

Rics said that a typical first-time buyer in London is perceived to need a deposit of 22% to put down on a home, compared with a smaller deposit of 19% required at the start of 2014.

London surveyors have the lowest expectations in the UK for house price growth over the next 12 months, typically putting the percentage increase at 1.9%.

Despite the signs of a slowdown in demand from potential home-buyers, the typical surveyor sold nearly 25 properties in the three months to July, putting house sales at the strongest levels seen since summer 2007.

An overall balance of 5% of surveyors reported demand for homes falling rather than increasing in July, marking the first net decline in buyers coming to the market seen since January 2013, which was before the launch of the Government's flagship Help to Buy mortgage support scheme.

Rics said it is not yet clear whether the trends it is seeing represent "a pause for breath or a genuine turning point".

It said that while across the UK, the housing market picture appears "broadly resilient, the London indicators are going into reverse".

Across the UK, prices are predicted to increase by 2.6% over the next year. The highest price growth expectations were found in East Anglia, where surveyors expect an average annual increase of 4.3%.

Rics said that despite the number of new properties coming onto the market across the country showing an overall increase for two months in a row, the supply of homes to choose from remains "very tight", meaning that in general, the momentum for price increases is likely to remain "robust".

Stricter mortgage lending rules came into force at the end of April. The new Mortgage Market Review (MMR) rules force lenders to carry out more detailed checks into a borrowers spending habits.

Earlier this week, the Council of Mortgage Lenders described the MMR effect as more "gentle dampener than hard brake" - but Rics said the new rules have been "widely cited" by its members for "at the very least, slowing the pace at which new loans are being sanctioned".

Rics said another factor is the talk coming from the Bank of England, which has "gone out of its way to engineer a change of mood through a series of high profile verbal interventions and warnings, particularly in relation to the London market".

The Bank recently announced new mortgage lending curbs, saying that loans of 4.5 times a borrower's income or higher should account for no more than 15% of new mortgages issued by lenders.

Housing minister Brandon Lewis said: "The housing market has turned the corner, but mortgage lending activity in the housing market and loan-to-value ratios on new mortgage lending remain below their historic averages.

"Relative to earnings, median house prices across England are around the same level they were in 2005.

"The sector is clearly moving in the right direction, but there is still more to do, and improving the housing market will continue to be a vital part of our long-term economic plan."

PA