The BSA said that the new changes brought about by MMR and media scrutiny may be responsible for undermining previously high levels of confidence in the market.
Only 29% of people believe that now is a good time to buy a home, down from 40% three months ago.
The report also shows that 62% of Londoners believe there is a housing bubble in the capital, while 55% of people across the UK agree.
Views on prices across the UK differ greatly however, with 20% of those interviewed believing there is a nationwide housing bubble.
Prices are now rising across all regions, but many still remain under 2007 peak levels.
The report also shows that building new homes is seen as the most effective way of curbing house price inflation, with 40% of first-time buyers believing it to be the best solution.
And only 28% of first-time buyers said they would be deterred from buying a property if the Bank of England introduced additional controls on mortgage lending.
Curbing the Help to Buy scheme was also deemed an ineffective solution to reducing high risk lending, with just 6% of the public believing this would work.
Paul Broadhead, head of mortgage policy at BSA, said: “For decades successive governments have failed to address the problem of housing supply.
“Help to Buy has provided a much needed shot in the arm of the construction industry and has had a beneficial effect on consumer confidence, despite actual lending being low.
“The single biggest issue in the market remains to be lack of supply,” he said.
“This quarters’ Property Tracker clearly shows that consumer confidence has cooled and I would urge the FPC to take caution.
“MMR has already begun to have an effect on dampening demand- the Committee’s tools are untested and could prevent people from buying without addressing the core problem of under supply.
“If the government is serious about tackling the challenge, then it should appoint a housing minister who sits at the heart of Government.
“An overarching housing strategy is urgently needed, one that looks beyond the next parliament and co-ordinates the range of government departments with a responsibility for all parts of the housing market, including infrastructure development.”
