RICS revealed that there were fewer than 13 sales per surveyor over the last three months, with some agents reporting fewer than one sale per week. Last year estate agents sold almost double this amount and 5.25 properties per week at the peak of the market in 1988.

Jeremy Leaf of RICS said: “A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery. While money is scarce, many will continue to be denied the next step on the property ladder.”

“In the absence of much transactional activity many home owners are being forced to rent their properties while they wait for lending criteria to be loosened and demand to pick up,” he added.

He doubted that the reform package revealed by ministers last week would do anything to alleviate the crisis: “The Government’s stamp duty policy will not be enough to kick-start transactions and is more likely to assist buy-to-let investors with better access to finance than the first time buyers it was aimed at.

“More needs to be done to reinvigorate a market whose confidence has taken a severe knock”, he urged the Government.

While new buyer enquiries and new instructions also fell slightly in August, the slowdown might be due to the fact that August is traditionally a weak month for property transactions due to the holidays.

However, RICS reports a lift in house price figures as the institution’s house price balance improved slightly for the fourth month in a row. Although it still remains on a low level with 81 per cent of surveyors reporting a fall rather than rise in house prices, the figure decreased from 83.1 per cent in July.

On a positive note, the latest repossession figures for those homeowners who fail to keep up with their mortgage repayments still remain stable and well below the levels of the early 1990’s, so possibly the Government’s rescue package has had some impact alleviating some of the trauma associated with this process.

Simultaneously, Graham Beale, CEO of Nationwide Building Society, gave a pessimistic outlook about the housing market predicting a 25 per cent drop in house prices from their peak last year before they finally start to recover. Such a fall would push millions of homeowners into negative equity.

Mr Beale said he does not expect that the recovery will be fast: “I think that next year we will see a similar pattern to this year. And I think before we really get to the new world, whatever that is, I think we will be into 2010.”

© Fair Investment Company Ltd