The number of properties sold in England and Wales has fallen by more than a third compared with 12 months ago, Land Registry figures have shown.
Price growth is easing, surveys suggest
The volume of house sales in the first three months of 2005 was down 34.8% against the same period in 2004.
Annual price growth continued to ease, with prices up 10.3% on the same period in 2004, compared with annual growth of 11.8% seen in the previous quarter.
Recent surveys from mortgage lenders have hinted that the market is cooling.
Economic forecast group Capital Economics recently said that the UK housing market was at an "impasse", with buyers no longer willing, or able, to meet asking prices and sellers reluctant to lower them.
The Land Registry survey found that the number of sales in England and Wales fell to 159,116 between January and March, down from 243,914 for the same period in 2004.
The survey also found a decline in the number of properties being sold for more than £1m, dropping to 655 from 795 in 2004.
"We've seen since July/August last year the beginnings of a slowdown in take-up," John Morgan, managing director of Morgan's Estate Agents in Leeds, told the BBC.
"I think certainly we'll start to see a much more modest approach on the part of agents and vendors in terms of what they're going to have to do to get moving again," he said.
John Wriglesworth, housing economist at Hometrack, said one of the reasons for the sales slowdown was that sellers were refusing to drop their asking prices to "more realistic and sellable" levels.
"Unless people price properties realistically they're not going to sell them," he said.
The Land Registry said the average house price in England and Wales was £183,486 in the January to March period, up from £166,404 in 2004, with all regions of England and Wales recording an increase in prices.
Recent surveys by the UK's two main mortgage lenders found that house price inflation has fallen, with the Halifax recording a drop from 9.7% in March to 7.8% in April, while the Nationwide said it had dropped to 7% from 7.9%.
ANNUAL PRICE GROWTH
England & Wales: 10.27%
Yorks & Humber: 15.01%
North West: 14.97%
East Midlands: 13.15%
East Anglia: 10.75%
West Midlands: 10.09%
Greater London: 9.83%
South West: 9.70%
South East: 8.20%
Source: Land Registry
The Halifax also noted prices had remained almost unchanged since the start of the year.
However, the uncertain state of the housing market was underlined on Monday when a study by the Office of the Deputy Prime Minister - a study which uses a different methodology to the Halifax and Nationwide - found annual house price inflation increased to 12.6% in March.
Land Registry figures are less up to date than those of banks and building societies, since they record completions not mortgage approvals.
But, it is viewed as the most accurate measure of house prices as it includes all property transactions, including cash sales.
Rates on hold
Worries over soaring UK house price rises contributed to the Bank of England raising interest rates five times between late 2003 and August 2004.
Recent signs of the slowdown in the housing market - coupled with signs that consumers are reining back their spending on the High Street - are an indication that these rate rises are now having an impact, analysts say.
On Monday, the Bank of England held rates at 4.75%, and some analysts are now speculating they may have peaked, with the next move being downwards.
Housing experts are split over what will happen to the UK market. Some analysts have predicted that prices will fall over the next couple of years, while others forecast a 'soft landing', with price growth slowing but not going into reverse.