A buyers' strike means three in five homes listed for sale since January are yet to sell, according to property listing site Zoopla.
Buyers have vanished amid higher mortgage rates and political turmoil, with homes sitting on the market and enquiries about properties down 15 per cent compared to last year, it said.
The West Midlands has seen the steepest collapse in buyer demand, with enquiries dropping by 30 per cent compared to last year, closely followed by the North East, down 29 per cent.
Higher mortgage rates have shrunk the pool of committed home buyers, according to Zoopla.
The property website says the jump in mortgage rates in April has added £125 a month to the average first-time buyer’s costs, rising to £232 for those in London.
Can't sell: One and two bedroom flats are vegetating on the market with more than two thirds listed this year still unsold
Simon Gerrard, chairman of Martyn Gerrard estate agents says that Zoopla's data reflects what many on the ground have observed for some time.
'The market is under considerable strain,' said Gerrard. 'Headline figures often mask what is truly happening at the regional level, and London in particular has borne the brunt of a pronounced slowdown.
'As a leading agency in our area, we recorded a 33 per cent drop in valuations last week alone - a notable decline for this time of year.
'Demand across London has softened [dropped] by around 20 per cent, as confidence continues to be eroded by international uncertainty in the Middle East, and upward pressure on interest rates.'
An upcoming change of Prime Minister and questions over future tax and spending priorities in the Autumn Budget are also adding to the uncertainty with more people taking a wait-and-see approach until the outlook becomes clearer.
Figures yesterday from the Bank of England revealed home buyer mortgage approvals dropped 15 per cent in May.
While sales are down just 7 per cent on average across the country as a whole, some locations have seen a much steeper decline than others.
In Wales the number of sales is down 12 per cent, while sales are 11 per cent lower in the East Midlands and 10 per cent lower in the East of England and the South West.
But an even bigger divergence is playing out between houses and flats.
Two and three-bedroom houses are selling at a pace similar to last year’s across the country, according to Zoopla.
However, one and two-bedroom flats remain the weakest market segment, as over two-thirds listed this year remain unsold.
With first-time buyers being the typical audience for these properties, this reflects their exposure to higher buying costs and subsequent step back from the market.
Landlords were also keen buyers of flats, but they too are buying in smaller numbers, largely as a result of harsher tax treatment and more regulation.
'Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty,' said Richard Donnell, executive director at Zoopla.
'The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall.
'The national picture can only tell you so much, and local market conditions vary considerably across the country.
'For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.
'For buyers, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago.'
Jeremy Leaf, north London estate agent and a former Rics residential chairman, thinks there is too much property on the market across various price ranges.
He adds: 'Sales are taking much longer and it is proving increasingly difficult to generate commitment.
'However, the overwhelming majority of sales which have been agreed are proceeding, although inevitably more slowly and suffering relatively few price negotiations.
'This is likely to prove the 'new normal' at best, looking forward, particularly now that domestic political uncertainty is another factor to consider'.
Despite the gloomy picture, Zoopla said house prices are still rising across the UK - up 1.4 per cent annually on its index. Leading the way among major cities was Belfast, where prices rose 4.7 per cent, followed by Liverpool at 4.6 per cent and Newcastle at 3.6 per cent.
The greatest fall of 1.4 per cent was seen in Bournemouth, followed by Cambridge down 1.3 per cent and Oxford dipping 0.2 per cent.
Simon Gerrard of Martyn Gerrard estate agents says certain properties remain popular.
'Unique, high-quality homes, such as mews houses, church conversions, and best-in-class properties, will always attract interest, regardless of broader market conditions,' he added.
'Success still depends on precise alignment with buyer expectations; in today’s market, it must be exactly what the buyer is looking for.'
