The Royal Institution of Chartered Surveyors said its survey found the market remained generally 'very nervous', with a high sales failure rate. Would-be buyers were willing to withdraw on the slightest pretext between acceptance of an offer and exchange of contracts, the institution said.
It also called for stamp duty on housing transactions to be reformed to its original purpose as a tax on luxury properties.
It said the Government should raise the lower limit for application of the tax from pounds 30,000 to pounds 60,000, to remove the most inexpensive properties from duties and help first-time buyers.
Pointing to strong regional differences in the housing market, the institution said the North, Yorkshire and Humberside were continuing their trend towards recovery while an upturn still seemed 'some way off' in the South-east.
'The market is taking two steps forward and one step back as it coughs and splutters its way to health, in an economic environment still overshadowed by employment worries,' Peter Miller, a spokesman for the institution said. Estate agents reported the post-election rally in April and May had faded.
Mr Miller said: 'In a market that overwhelmingly favours the buyer, some vendors are not even looking for a new property until they have sold their existing one, and then driving a hard bargain for the next purchase. The worst is over but improvement is almost undetectable.'