The Royal Institution of Chartered Surveyors (RICS) said sales in the property market were at their lowest level since its monthly survey started in 1978.
 
It said prices picked up slightly for the fourth month in a row, but were still sharply down on a year ago.

It added that in June and July, surveyors reported that many sellers had dropped asking prices to more realistic levels and that predatory buyers were waiting to pounce on bargains, but the traditionally weak month of August has seen this interest stagnate.  

RICS spokesperson Jeremy Leaf said:
"A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery. While money is scarce, many will continue to be denied the next step on the property ladder. The Government's stamp duty policy will not be enough kick start transactions and is more likely to assist buy-to-let investors with better access to finance than the first-time buyers it was aimed at. More needs to be done to reinvigorate a market whose confidence has taken a severe knock.

"In the absence of much transactional activity many home owners are being forced to rent their properties while they wait for lending criteria to be loosened and demand to pick up."