The supply of houses for sale has dropped by 27 per cent compared to this time last year, according to the National Association of Estate Agents. There are now 44 properties available per NAEA branch.
Its report shows that around 19 per cent of properties sold for more than the asking price in May, nearly three times the seven per cent figure when NAEA first collected this data in September 2013.
Around 46 per cent of sellers accepted lower than asking price, the smallest percentage since 2013, when 71 per cent of sellers did so. The proportion of first time buyers purchasing a home in May dropped to 25 per cent, down from 28 per cent in April.
"The number of househunters is substantially higher than the number of properties on the market, so competition is always going to be rife," said Mark Hayward, Managing Director of the NAEA. "Unfortunately the lack of housing problem is not going to go away anytime soon. We have seen a shortage in the number of new builds in the last five or so years, and those who are currently in a property and looking to move may be put off by the cost of stamp duty.
"With limited numbers of houses for sale, unfortunately it means that those who simply can’t afford to increase their original offer will often be priced out the market."
The report also found that semi-detached homes continued to be the most popular choice for buyers with over a third of househunters in May looking for this type of property, followed by detached (29 per cent), terraced (10 per cent) and flats (18 per cent). Nearly half of buyers were looking to up-size.
Mortgage lending in May was £16.5 billion, according to the Council of Mortgage Lenders, exactly the same as in April and 12 per cent higher than May last year.
"Market indicators point to a slowdown in activity levels, in part associated with new mortgage rules, but it is unclear how lasting this will be," said CML chief economist Bob Pannell, who described the results as a 'statistical fog'.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the threat of an interest rate rise is 'bound to be having an impact' on people's thoughts on taking on new debt.
"While it still looks as though the first rate rise won't come before the middle of next year at the earliest, fixed-rate mortgages are becoming more expensive, and will continue to do so," he said. "However, borrowers shouldn't panic as five-year fixes are still available for a little over three per cent, historically, an excellent rate. Borrowers might want to secure a fix now though if they need certainty rather than waiting several months to see what happens. Ultimately, there is only one way for interest rates to move and that's upwards, it's a question of when this will happen."
Meanwhile, lettings specialist Belvoir's latest figures indicate that the average UK rent in the first three months this year was £717 per month, a slight year-on-year rise.
"Contrary to media reports of massive rental increases, the market has remained steady, with many regions still not recovering to 2008 levels," said Dorian Gonsalves, Belvoir's Director of Commercial and Franchising.
"Although rents in Yorkshire are now recovering to pre-recession levels, only rents in the South East, South West, West Midlands and London are exceeding the heights achieved in 2008 and it is the London market that has seen the biggest increase."
The report shows that rents in 14 counties, including Lincolnshire, Norfolk and Dorset have yet to reach 2008 levels, while rents in Essex and North Yorkshire are on a par with the 2008 level.