The balance of surveyors reporting house price falls has reached levels not seen since the early nineties housing market correction, says the RICS UK Housing Market Survey.
The RICS house price balance dropped to its lowest level since November 1992.
49.1% more Chartered Surveyors reported a fall than a rise in house prices, down from 40.6% in November 2007 - the most negative since November 1992 when 60.1% more Chartered Surveyors reported a fall than a rise.
The new instructions net balance turned positive for the first time since May 2007.
4% more Chartered Surveyors reported a rise than a fall in new instructions to sell property, compared with -7% in November.
Looser supply can be partly attributed to the extension of HIPs (Home Information Packs) to all properties as homeowners attempted to avoid the cost of a HIP by marketing their properties before the deadline.
Meanwhile, the credit crunch does appear to have impacted on the London market with a steady supply of property coming onto the market since August.
However, demand still remains subdued.
25% more Chartered Surveyors reported a fall than a rise in buyer enquiries down from 31% in October.
Many have been prevented from moving forward by tightening mortgage lending criteria but likely interest rate cuts could help stabilise the market as many first time buyers are waiting on the sidelines.
The balance of newly agreed sales declined for the seventh consecutive month with falls occurring across the country with 21% more Chartered Surveyors reporting a fall than a rise in newly agreed sales.
Sustained weakness in demand, combined with loosening supply conditions is resulting in greater stocks of property on surveyors books.
The stock of unsold property on surveyors books jumped by 7.1%, following last month’s rise of 9.1%. As a result, the ratio of completed sales (over the last three months) compared to the stock of unsold property on the market fell to 30.7%.
Market conditions are now the loosest they have been since August 2005, although this indicator remains above the 27% low recorded earlier that year.
Surveyor confidence in sales and house prices reached the lowest level in a decade.
Effects of the credit crunch and the current negative news flow are having a negative impact on sentiment but interest rate cuts may improve optimism in the coming months.
Surveyors reported price falls across all regions in England and Wales.
The heaviest falls took place in the West Midlands and East Anglia.
Only in Scotland have surveyors reported price rises.
RICS spokesman Ian Perry said:
"The housing market is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007.
"While sentiment seems to have reached its lowest ebb, the underlying economic conditions are vastly different to what the country experienced in the early 1990s.
"Supply would have to loosen considerably before prices experience a significant dip.
"However, the coming months will be of great importance to the market and many would-be-buyers will be watching the Bank of England’s interest rate decisions while lenders remain reluctant to part with finance.
"The Bank of England may have to cut rates further if the market is to remain in a stable condition."
A historical index of RICS Housing Market Surveys is available at www.rics.org/hms.
