While more than 160,000 homes were sold this time last year, last month only 100,000 property transactions with a sales value of more than £40,000 have been completed successfully which equals a 37 per cent decline.

HMRC’s figures highlight the gravity of the situation, particularly as, at the same time, house prices are falling faster than at any time during the last 25 years.

Experts believe the situation will get even worse with potential buyers either fearing to buy at a time when prices are in rapid decline or not being able to secure a mortgage at a rate they can afford.

Treasury spokesperson Lord Oakeshott said: “In this horrible market, you only sell if you have to.” Indeed, most of those who are still keen to sell or buy are people who have to move for professional or other reasons.

Figures published by property website Rightmove showed that, on average, the number of properties estate agents have on their books at present had reached a record high of 75 homes, while most only managed to sell approximately 17 houses by the end of May.

The Royal Institute of Chartered Surveyors (RICS) confirmed that the number of property transactions had fallen to a 30-year low, and warned that a further decline may lie ahead as buyers remain cautious.

Simon Rubinsohn, chief economist at RICS, commented: “These numbers clearly highlight the very real pressure on the residential property market. Indeed, the RICS suspects that the level of activity will fall further over the coming months.”

“We are predicting 40 per cent for 2008 as a whole,” he continued, “we are getting some very negative feedback from our members.”

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