The latest property price index from the UK government shows that values were still rising in May and suggest the market, although slowing, is doing better than other reports suggest.

The UK house price index produced by the department of Communities and Local Government includes data based on mortgage completions during the month of May 2010 and shows that prices increased 0.7% in May and are 11% higher than in the same month last year.

The mix-adjusted average house price in the UK stood at £209,505 in May 2010, the figures also show and on a quarterly basis they rose by 1.7% in the quarter compared with a rise of 2.9% for the quarter ending February 2010

Overall annual average house prices rose 11.7% in England, 3.7% in Scotland and 10.9% in Wales but fell 1.1% in Northern Ireland. Annual average house prices paid by first time buyers in May 2010 were 11.6% higher than a year ago. Average house prices paid by former owner occupiers were 10.8% higher.

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Residential property prices are set to fall in the UK in the second half of 2010 as supply outstrips demand, but sales are expected to increase, according to a report published today (Tuesday July 13).

Weaker demand and increased supply is affecting the fragile recovery in residential real estate prices in the UK, says the June Housing Market survey from the Royal Institution of Chartered Surveyors.

Demand as measured by new buyer enquiries fell for only the second time since the latter part of 2008 while the net balance for new instructions rose to the highest level for three years impacting on sentiment for future price rises, it shows.

Some 10% more chartered surveyors reported a rise than a fall in house prices down from 22% in May the report reveals.

Although surveyors are still reporting house price rises in most parts of the country the increase in supply is pushing many of the regional net balances towards negative territory. The most notable exceptions to this trend are London and Scotland.

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