Fear destabilising fragile property chains

Buyers have been withdrawing offers more frequently, according to the Bank of England, doing little to alleviate the subdued level of activity in the market overall.

First-time buyers continue to struggle to raise a sufficient deposit, pushing up demand for rental property, according to the Bank's agent's summary.

The London market and particularly the higher-end is still being supported by inflows of money from abroad, partly because of the perception of its status as a safe haven for international investors. At the premium end of the market, supply continues to be plentiful with homes increasingly coming on to the market.

However, a reduction in government grants to housing associations has lowered the supply of social housing.

On the wider economy, the BoE said rising prices for essential services, such as transport and housing, had reduced the amount left over for spending on leisure activities.

This situation is unlikely to improve as employment intentions in the private sector continued to weaken, making it unlikely recruitment will increase over the next six months.