The news comes as no surprise to experts who have been predicting further damage to the housing market as a result of the credit crisis. However, house sales aside, the latest housing market survey did not hint at massive market deterioration.

In fact the research offered a glimmer of hope as the number of chartered surveyors reporting house price falls decreased slightly in May to 92.9 per cent compared with 94.7 per cent in April.

In addition, the number of surveyors reporting a fall in buyer enquiries reduced to a slightly more respectable 51 per cent compared with 69 per cent in April. However, despite the encouraging factors, the number of chartered surveyors reporting new instructions to sell property fell to -26 per cent – the lowest figure since the question was first asked in April 1999.

Commenting on the results, RICS spokesperson Jeremy Leaf, said: “While demand remains weak and housing transactions continue to evaporate, there is a very real danger to the wider economy.

“The property industry will not be the only casualty in the fall out from the credit crunch, with the high street and purveyors of a range of household goods, including furniture and white goods also feeling the pinch.” He added.

Meanwhile, mortgage rates and deposits continue to rise; last week saw Bradford & Bingley, Alliance & Leicester and Abbey increase the rates on several mortgage products, despite the Bank of England base interest rate remaining static at five per cent.

Moneyextra.com has commented on the actions of mortgage lenders and the consequences to potential buyers, arguing that lenders are pushing first time buyers out of the market by asking for large deposits of as much as 40 per cent.

Senior editor at Moneyextra.com, Robin Amlôt, said: “First time buyers are being pushed out of what’s left of the housing market – being asked for deposits that could run into several tens of thousands of pounds.

“It’s all but impossible for many potential buyers to find a lender because of the size of deposit they’re being asked to provide.” he said.

©Fair Investment Company Ltd