The red-hot property market has started to cool, with buyers locked out by surging prices and a lack of homes for sale.

Since the extension to the stamp duty holiday was announced in March, agents have reported properties selling within days of listing online. 

But as the deadline for the full tax break approaches at the end of this month, the frenetic market has slowed.

The number of sales agreed by estate agents in May was 17 per cent higher than the same month in 2019, according to property website Rightmove. This was much lower than April’s figure, when sales agreed were 45 per cent higher than two years prior.

House price growth also cooled in June, rising by just 0.8 per cent, compared to monthly jumps of 1.8 per cent in May and 2.1 per cent in April.

The average house price still hit a record high of £336,073 for the third consecutive month, a trend which Tim Bannister, of Rightmove, said was contributing to the market’s ultimate slowdown.

"Higher prices combined with a lack of fresh choice of homes coming to market are reducing some buyers’ ability or desire to move. While we expect the market to remain robust, there are early signs of a slackening in the incredible pace of activity that we’ve seen over the last year," he said.

The phasing out of the stamp duty holiday, which will be tapered from the end of June, is also expected to dampen buyer demand.

Official figures published last week hinted at what might be in store for house prices once the tax break ends. 

In April, prices in Scotland fell by 4.1 per cent month-on-month once stamp duty rates returned to pre-pandemic levels. Analysts warned of a similar impending cliff-edge when the tax break ends in England.

Rightmove said that there are on average 17 properties available per estate agency branch, which is far lower than the long-term norm. 

But Mr Bannister said stock was even lower in the most sought-after locations. The south-west, for example, has the lowest stock levels in the UK, with 10 properties per branch. "Some agents say they are pretty much sold out," he added.

The North and Wales have reported the biggest surges in house prices in the last year, with London consistently recording the lowest growth as buyers flocked to the countryside.

However, some areas of the capital have shown signs of a revival. New listings in the most expensive areas, known as "prime" London, were 33 per cent higher in May 2021 than the same month in 2019, according to analysis firm LonRes. This was 8 per cent higher than the five-year average.

Last month was also the busiest May for properties going under offer in prime London since 2014.

However, Marcus Dixon, of LonRes, said surplus stock on the market after a quiet year meant that house prices were still 1.9 per cent lower than last May.

"Demand is not outstripping supply in most areas of prime London. Estate agents’ windows have, for the most part, stayed well stocked, meaning prices have not seen the rapid growth experienced in other parts of the country," he added.