More encouraging news for those involved in selling houses came from the surveyors’ body RICS today with the release of its latest housing market survey.

The survey adds further weight to the argument that the catastrophic collapse in house prices has been arrested, with the balance between surveyors reporting falls in prices and those reporting rises becoming less negative.

Although the balance in favour of surveyors reporting prices falls is still large, a look at the survey in more detail does show that the scale of price falls has reduced, with far fewer surveyors reporting large price drops.

The survey also suggests that there is greater interest from buyers, with an increase over the past five months in the numbers of buyer inquiries. While this does fit with other evidence relating to mortgage approvals, a health warning is necessary with this figure with regard to potential survivor bias.

The survey measures the inquiries received by existing surveyors. There are fewer estate agents on the high street, so one might expect a rise in inquiries for those who have survived whether there had been an increase in activity in the market or not.

Leaving that technical point aside the clear picture is one of greater calm, even if prices are continuing to slide.

Given the level of Government intervention in the market and the emergency interest rate set by the Bank of England it would be seriously worrying if the housing market had not responded to some degree.

The real question is whether this is a temporary or a permanent check on the pace of decline in the market.

The big unknown haunting the market is the impact unemployment may have. Historically it has been a huge factor driving down prices, but while history has a habit of repeating itself it need not necessarily.

That said some worrying findings from the US suggest that unemployment and a drop in prices is more likely to lead to a foreclosure (repossession) than high interest rates.

I haven’t yet had a chance to read the full discussion paper from the Federal Reserve Bank of Boston and frankly it is rather technical in places, but I have linked to it for those with an interest.

However, here is a paragraph from the abstract: “An important implication of our analysis is that policies designed to reduce foreclosures should focus on ameliorating the immediate effects of job loss and other adverse life events, rather than modifying loans to make them more ‘affordable’ on a long-term basis.”

Now the US and UK residential markets are different and it is certainly not just repossessions that will define the market price of a UK house, but it would be silly to ignore warning signals.

Until the impact of rising unemployment on the housing market becomes clearer in the coming months, it would seem wise to accept as significant the risk that there will be a rise in the downward pressure on house prices.

It is worth adding, though, that does not necessarily mean that there will be a significant rise in the downward pressure on house building. The numbers game played by developers rests on the assumptions they make and at this stage of the game I suspect they are cautious.

So, to answer the above question, it looks as if we will have to wait and see if the housing market is out of the woods, or if it is just in a clearing in the forest.