Demand is down for the 12th successive month according to the latest market survey by the Royal Institution of Chartered Surveyors.
New instructions from sellers declined for the seventh consecutive month.
Prices are flat nationally but there are major regional variations with London seeing the sharpest fall in prices, according to the surveyors.
Respondents in the South East of England, East Anglia and the North East of England also reported prices to be falling, but to a lesser extent than in London.
Prices increased elsewhere in the UK in the last three months.
However London remains the only region where RICS members expect prices to be lower in a year’s time with the North West of England, Wales and Scotland are expected to see the largest price rises in 2018.
Agents quoted in the RICS report are outspoken in their comments.
“Stamp duty and Brexit have killed the fluidity of the London market. Only when the extent of the resulting economic damage is properly understood will things be able to change for the better” says Toby Whittome of Jackson Stops, in London.
In response to drifting rental market measures from RICS, Andrew Pearce of Millennium Properties in Wolverhampton says: “Demand is at an all-time high but supply is dwindling with tax changes, stamp duty and soon agents being unable to charge for essential reference searches. A crucial sector of the housing market is being badly led – to the detriment of landlords and tenants.”
Overall, RICS says its latest market snapshot suggests the next Bank of England interest rate rise may be delayed.
“The results provide little encouragement that the drop in housing market activity is likely to be reversed any time soon. It has the potential to impact the wider economy contributing to a softer trend in household spending” warns Simon Rubinsohn, chief economist at RICS.
“This could make Bank of England deliberations around a May hike in interest rates, which is pretty much odds-on at the moment, a little more finely balanced than would otherwise be the case.”