Demand for property is cooling, according to the Royal Institution for Chartered Surveyors’ latest monthly report.

It found that the number of new buyers coming to the market, and the total number of sales both dropped.

However, the number of properties for sale stayed flat, meaning there is still limited supply supporting house prices.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The property market is coming off the boil, with demand falling again, supply flat, and sales slowing. A desperate lack of property available to buy is keeping prices rising, but the fire has gone out, so the latent heat in the market is cooling.

“Rising prices, the threat of higher interest rates, and now the uncertainty of the political landscape are finally taking a toll.

“The buyers are still there, but they’re increasingly cautious, and they’re keeping one eye on how bad things are going to get for them financially. As life gets tougher, more of them are pulling out of agreed sales and trying to negotiate a lower price.”

Lettings market runs hot

In the lettings market, surveyors reported an increase in tenant demand over the month alongside a fall in new rental properties coming onto the market. As a result rents are still rising.

Coles said: “Runaway rents continue to push costs up alarmingly for tenants. It’s yet another month when we’ve seen demand rise and supply fall, which is inflating rents alarmingly.

“Landlords are selling up, which is partly an effort to cash in on higher prices at the top of the market. However, overwhelmingly agents say they’re getting out of the business because of the increase in legislation. Several mentioned concerns about the white paper, published in mid-June, which is a vital step forward for tenants’ rights, but adds more responsibilities for landlords, and includes measures making it more difficult to raise rents. There’s a reasonable chance it could persuade even more to sell up.”