House prices are starting to reflect the shift in demand in the market, according to surveyors.
Agreed sales, house prices and new instructions to sell homes remained on a downward trend in January, the Royal Institution of Chartered Surveyors said.
Property professionals' expectations suggest this picture is likely to remain in place for a while longer as the market adjusts to higher interest rates, Rics' report added.
A net balance of 47% of surveyors reported seeing a fall rather than an increase in new buyer inquiries, deteriorating from a balance of 40% who saw this the previous month.
January marked the ninth negative monthly reading in a row for new buyer inquiries.
Overall, those surveyed in all parts of the UK saw either a fall in demand or a stagnant trend over the latest survey period, Rics said.
A net balance of 14% of survey contributors also reported a decline in fresh properties coming on the market over January.
Looking at the year ahead, a net balance of 20% expect to see house sales fall rather than rise, marking an improvement compared with a balance of 42% expecting sales to fall in the next 12 months in December.
The latest feedback also pointed to house prices continuing to decline, with a balance of 47% of surveyors observing price falls and particularly sharp declines seen in the East Midlands and the South East.
And in signs of upward pressure on rental prices, tenant demand continued to increase, according to a net balance of 43% of survey contributors.
At the same time, landlord instructions continued to fall, Rics said.
Simon Rubinsohn, chief economist at Rics, said: "Although some respondents to the January Rics survey have noted a little more interest in the housing market as the new year got under way, the overall tone of the feedback still remains subdued, which is not altogether surprising given the jump in mortgage rates since the autumn.
"Prices, meanwhile, are now beginning to reflect the shift in balance between demand and supply.
"However, it is questionable how much downside to pricing there is likely to be given that recent macro forecasts from the Bank of England and others are now envisaging a less harsh economic environment this year.
"Meanwhile, the rental market continues to show strong interest from tenants and limited stock available which is keeping a firm momentum to rental growth."
The residential market survey is a monthly sentiment survey by Rics of chartered surveyors operating in the UK's residential sales and lettings markets.
A Cambridge-based estate agent was quoted in the report saying: "The best quality, best located properties are still selling well at prices which are not significantly changed over those achieved last year."
A property professional in Edinburgh told the survey: "December and January were typically slow.
"The general rhetoric from potential sellers is 'wait and see'.
"A steady increase in market activity in Edinburgh and the Lothians is anticipated through the spring into the summer. Interest rates and cost of living are undoubtedly having an impact."
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