House sales have plummeted by almost 40% since the peak of the boom five years ago, the Royal Institution of Chartered Surveyors (Rics) said today.
Just over 15 completed sales were made per surveyor in the three months to May, a 40% drop on around 25 sales made over the same period in 2007.
The reluctance of many banks to offer people mortgages they can afford is behind the "stagnant" market, Rics says, although it expects sales to pick up over the summer months.
Lenders have been tightening their borrowing criteria amid the weak economy and the ongoing eurozone crisis, making it harder for people to take out a mortgage, with several putting up their rates for both new borrowers and more than a million existing ones.
There were 51,823 house purchase approvals in April, worth £7.6 billion, a 1.5% increase on the previous month, but still under the previous six-month average, according to recent Bank of England figures.
The figures have been modestly creeping up after hitting a seven-month low in February, just before a two-year stamp duty holiday for first-time buyers ended the following month.
A balance of 9% more surveyors in the RICS survey expect to see a rise in transactions in the coming months, although this does not mean prices will also increase.
House prices fell in May
House prices continued to drop last month as 16% more respondents reported falls rather than rises, a statistic which has remained negative since June 2010.
London, which has had strong demand from overseas buyers, remained the only area where more surveyors reported price increases rather than decreases.
RICS housing spokesman Peter Bolton King says: "Ongoing economic instability in the UK and overseas has continued to undermine consumer confidence, and the reluctance of many banks to offer affordable mortgage products has created something of a stagnant market.
"In spite of this, a gradual stability is returning to the market and surveyors expect transaction levels to increase over the coming months, even if prices continue to dip across most parts of the country."
The study also found that with transactions down and mortgage finance harder to come by, homes are also taking longer to sell.
During the three months to May, surveyors sold 23% of the homes on their books, compared with 41% in the same period in 2007.