British house prices fell at their slowest pace since July 2010 last month, and surveyors expect prices to stabilise in the coming months as the economic outlook brightens, the Royal Institution of Chartered Surveyors said on Tuesday.

The value of British houses fell sharply at the start of the financial crisis and has been generally stagnant since then, with transaction volumes about half that before the crisis due to a lack of mortgage finance and uncertainty over jobs.

But Tuesday's RICS data adds to some tentative signs - including an improvement in employers' hiring intentions that the economy is starting to pick up after contracting by 0.2 percent at the end of 2011.

The RICS seasonally adjusted house price balance rose to -13 in February, its highest reading in more than 18 months, and above the -15 forecast in a Reuters poll. It stood at -16 in January.

A balance of -13 percentage points is the seasonally adjusted difference between the percentage of surveyors who mostly saw price rises in the three months to February and the percentage who mostly saw price falls.

Surveyors' expectations for house prices over the coming three months jumped to zero from -14, the highest reading since May 2010.

This is partly due to first-time buyers seeking to take advantage of a tax break on home purchases before it expires on March 24, but surveyors also said much of the rise in sentiment was more durable, their professional body said.

The fact that near-term expectations have not receded and longer-term price expectations are improving suggests other, more fundamental factors are also beginning to pl ay a role in influencing the market - most notably a perception that the downside risk to the economy may have lessened, RICS said.

London continued to be by far the strongest regional housing market, with significantly more surveyors reporting price rises than falls. That was in contrast to the rest of Britain where most surveyors reported falls.

(Reporting by David Milliken; editing by Andrew Osborn)