An RICS survey of the housing sector has found that confidence is drying up as would-be purchasers expect interest rates to rise.

A range of indicators tracked by the institution deteriorated sharply in July, and surveyors’ confidence in sales numbers turned negative for the first time since March 2003.

Although prices rose more quickly than in the previous month, new buyer enquiries fell at their fastest rate since August 2004.

More surveyors expected a fall in sales over the coming three months than expected a rise. Surveyor confidence in prices was also negative, at the lowest level since June 2005.

London outperformed the rest of England with strong price rises. They also rose rapidly in Northern Ireland, but other regions suffered. House price growth halved in Scotland, the survey showed, and was negative in most English regions and Wales.