By Jennifer Ryan Aug. 11 (Bloomberg) -- The U.K. housing market improved in July as the biggest proportion of real-estate agents and surveyors in two years saw increases in home values, the Royal Institution of Chartered Surveyors said. The number of respondents saying prices dropped exceeded those reporting gains by 8 percentage points, the smallest margin since August 2007, RICS said in its monthly survey today in London. Separate reports showed mortgage approvals jumped 23 percent in June, home values increased in the same month, and retail sales rose in July from a year earlier. The RICS report adds to evidence that the rout in residential property may have ebbed. The Bank of England last week extended its bond purchase program to 175 billion pounds ($288 billion) to repair “fragile” financial market conditions and underpin signs the economy is emerging from the worst recession in a generation. “We’re seeing an improvement in the housing market, but it’s worth remaining cautious as we’re still at a relatively low level,” said David Page, an economist at Investec Securities in London. “There’s been a gradual improvement in bank lending but there’s a great element of uncertainty there and it’s critical for the housing market.” The number of real estate professionals saying prices dropped last month exceeded those reporting gains by 8 percentage points, the narrowest margin since August 2007, RICS said in London. The Department for Communities and Local Government said the average house prices rose 1.6 percent in June to 191,423 pounds, 10.7 percent less than a year earlier. Mortgage Approvals Loans for house purchase reached 45,000 last month, with a total value of 5.9 billion pounds, the Council of Mortgage Lenders, which represents the nation’s home loan providers, said today in London. The number of loans dropped 6 percent from a year earlier. “With the buyers continuing to return to the market and a lack of stock available prices are being forced up when compared to the beginning of the year, a trend which is likely to continue in the short term,” James Perris of De Villiers Surveyors in central London, said in RICS’s statement. The group last week forecast house prices will rise this year after the decline in values from their peak two years ago and lower borrowing rates lured buyers. RICS’s survey showed London had the biggest improvement of the 12 regions it tracks, with a net balance of 29 realtors and surveyers saying prices rose in the last three months, followed by Scotland, with a net balance of 15. Loan Rates Central bank data published today showed little change in mortgage rates. The average Britons pay for a two-year fixed- rate loan with a 25 percent deposit, one of the most popular types of mortgages, was little changed at 4.46 percent, the Bank of England said today. Charges for standard variable rate mortgages were unchanged. The Bank of England last week increased its bond-purchase plan by 50 billion pounds to 175 billion pounds, saying the recession has proved deeper than previously thought. It held the benchmark interest rate at a record low of 0.5 percent. Governor Mervyn King will present the bank’s new quarterly growth and inflation forecasts tomorrow in London. “Given still very tight credit conditions, poor economic fundamentals and the fact that any sustained rise in prices would lead to affordability ratios moving back up, we suspect that house prices are highly likely to suffer relapses over the coming months,” Howard Archer, an economist at IHS Global Insight In London, said in a note today. A separate report today from the British Retail Consortium showed same-store retail sales in July rose by 1.8 percent from a year earlier. The BRC, which represents 80 percent of U.K. retailers, said total sales increased by 3.6 percent. To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

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