The BSA’s September Property Tracker reveals more than a quarter (27 per cent) of those surveyed did not think now was a good time to buy a property, compared to just 23 per cent who did.
Sentiment turned negative in June following the general election result and has remained that way despite a politically more stable environment.
Some 40 per cent of respondents said rising consumer prices were a significant concern for them, climbing to 51 per cent of potential first-time buyers.
Meanwhile, more than a quarter (28 per cent) said they were worried about the difficulty of saving for the future.
The BSA said the increasing rate of inflation – which rose from 2.6 per cent in July to 2.9 per cent in August, according to the consumer prices index – is making it difficult for households to save enough money for a deposit.
Saving for a deposit was found to be the biggest barrier to buying a home, cited by 68 per cent of respondents compared to 45 per cent who said the affordability of mortgage repayments was an obstacle.
Stamp duty was cited as a barrier by 38 per cent of prospective home movers, making it the second biggest barrier behind raising a deposit for this group.
Future falls in property prices were also high up the list of potential movers’ concerns, with 22 per cent citing this as a barrier compared to 16 per cent of all respondents.
Finding the right property was cited as a concern by a quarter of movers, reflecting the current lack of ‘next-step’ properties on to the market.
The poll was carried out by YouGov among 2,027 adults between 1 and 4 September.
Paul Broadhead, head of mortgage policy at the BSA, said: “Confidence in the housing market is clearly fragile.
"Consumers were faced with political uncertainty following the vote to leave the European Union and unexpected general election results, and now the rising cost of living is their latest challenge.
“Consumer prices are running ahead of wage growth, and there is little evidence of this changing in the short term. This is adding to the formidable affordability constraints already facing prospective home buyers.
“It is evident that home-movers are facing the same affordability pressures as first-time buyers, meaning some homeowners are unable to sell their property - further reducing choice and pushing up prices for those just getting on to the housing ladder.”
Despite rising inflation, the latest gross lending estimate from UK Finance continued an upward trend for 2017, pointing to a resilient market.
But Ian Bavey, investment and mortgage adviser at Newport-based Seer Green, said rising living costs could begin to act as a brake on the market – particularly if inflation prompts the Bank of England to raise interest rates.
He said: “Even a small rate rise puts a bit of a brake on it. I know it was voted (by the Monetary Policy Committee) last week to keep them the same, but a couple of them did vote to increase.
“The buy-to-let mortgage market as well is probably having a bit of an effect on the house sale front. We are only getting people buying houses for their own benefit now. The two together could slow the market down a bit.”
He added that stamp duty was not a concern for prospective home movers in Wales, where prices tend to be significantly less than in London and the south east.
“I don’t know what else can be done about stamp duty. Unless you own a string of properties, it is a lot less than it used to be. I have not come across any clients saying they can’t buy [because of stamp duty].”
simon.allin@ft.com
