House prices falling as quickly as crash of early 90s

Only further cuts in interest rates will avoid a property meltdown, according to the Royal Royal Institution of Chartered Surveyors.

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Its latest survey is the gloomiest since the dark days of the early 1990s.

One estate agent, from Salisbury in Wiltshire, said December was "maybe the worst we have had in 17 years."

The number of estate agents who report falling prices has soared to its highest level since 1992.

The news will strike gloom into homeowners who remember the early 90s when prices collapsed and the market was stuck in the doldrums for several years.

RICS spokesman Ian Perry said: "The Bank of England may have to cut rates further if the market is to remain stable."

The Bank cut rates in December by a quarter point to 5.5 per cent, but failed to cut them again this month.

Of the 500 estate agents polled by the RICS, more than 60 per cent said house prices have fallen over the last three months.

The institute lays great importance on what it calls the "balance" - the seasonally adjusted difference between the number of members who reported a fall and a rise.

This is currently 49.1 per cent, the highest figure since November 1992.

The crunch has hit almost every part of England and Wales while the West Midlands is suffering its fastest fall in history.

Several agents in the survey described the market as "depressing", "fragile" and "extremely quiet."

One, from Colchester, said the crisis could continue for five years.

He added: "The quarter point reduction was welcomed but we need more to follow in the New Year if the early 90s property recession is to be averted.

"If we don't, the country can expect a bleak time for the next two to five years."

Another said: "Home Information Packs plus Christmas plus interest rates plus credit crunch equals hard times."

The packs were blamed by most estate agents for the problems in the housing market.

All sellers must buy a pack which deters many of them from putting their home on the market just to "test the water".

Before HIPs were introduced, many put their house up for sale with no intention of selling but were persuaded by a good offer.

Government figures have shown the price of the average family home has fallen by about £270 a day.

Capital Economics, meanwhile, predicts prices will fall by five per cent this year and eight per cent in 2009.

• The average price of a fixed-rate mortgage is increasing despite December's cut in interest rates.

It was 7.30 per cent in early December but even after the BoE cut of 0.25 per cent, it has increased slightly to 7.31 per cent.

The moneysupermarket.com. group said there are a few deals around for borrowers with very good credit histories at rates 0.39 per cent less than a month ago.

But most people looking to take out a fixed-rate loan would now be likely to pay more.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "I shudder to think what would have happened to the average fixed-rate mortgage if the Bank of England had not cut the rate.

"Many homeowners who waited until after the interest rate cut to get a fixed-rate deal will be worse off."