Some London estate agents expect the house prices in the capital to increase this year. The house prices have been dropping in the city for the last 2 years.

According to a survey conducted by RICS, or Royal Institution for Chartered Surveyors, London house prices escaped the worst expectations and are expected to start stabilising, even rising this year. This may be due to the fact that the unemployment has not risen in London as much as many predicted. Areas in Midlands have been affected much more badly due to the loss of manufacturing jobs.

More people have been threatened by lenders and have been looking for ways to stop repossession of their homes in most parts of the counrty rather than in London.

Recently Nationwide and Halifax also suggested that the house prices may be stabilising. Mortgage approval rate was also rising as government instigated quantitative easing started to filter through the system.

“In the last couple of months as things have begun to recover, London has been at the forefront,” said Simon Rubinsohn, economist at RICS. “The worst fears of the City have not materialised and clearly overseas buyers have played a role.”

Estate agents report that they are selling one in five, or 20%, of properties on their books. This is an improvement from a few months ago when an average agent was making only one sale a week, and were struggling to pay salaries to their staff.

However many experts are cautious about the results of such surveys. There is no doubt that the sales inquiries have risen, which have made estate agents feel optimistic. However experts point out that it is buyers' ability to complete on the purchase as well as the price paid which is the correct indication of the state of housing market.

Similar results from other independent bodies like Halifax, Nationwide as well as RICS is a good sign. But the cautious types are more interested in the signs of long term recovery rather than what may turn out to be a flash in the pan.