The Royal Institution of Chartered Surveyors (RICS) said the national supply of new homes contracted for the fifth consecutive month in May and in London, demand for new homes fell for the first time since June 2012.

It said the effects of tougher affordability checks introduced at the end of April appear to be stemming the tide of prospective home buyers.

Despite UK house prices reaching record levels last month, it also reported that banks were lending less, with the average Loan to Value (LTV) ratios among first time buyers dropping to 85.3% from 86% the previous month.

Meanwhile, surveyors have reduced their expectations for house price growth over the next 12 months from 3.9% to 3.6% – the lowest since December 2013.

Simon Rubinsohn, RICS Chief Economist, said: “What we are really seeing is some of the very strong upward momentum starting to come off the housing market, as a lack of supply, higher prices, more prudent lending measures and some of the talk from the Bank of England are creating a level of caution among sellers and buyers.

“The most visible indicators of this are the revised downwards price expectations for the next 12 months and the flatter picture regarding new buyer enquiries. In particular, we’re seeing the London market level off.”

“There is some evidence to suggest that the Mortgage Market Review (MMR) has contributed to a tightening of the funding market, although it is hard to disentangle this from other factors which are now impacting on the sector and to know whether it will simply be a temporary influence as lenders adjust to the new environment.”