House sales fall to lowest level in three years

Latest figures from the Royal Institution of Chartered Surveyors show the average estate agent has sold just six properties a month for the past three months.

Apoll of RICS members in London found that 78 per cent feared prices would fall further in the near future. Only three per cent believed they would increase.

The number of buyer enquiries is also falling but the volume of properties being put on the market in London is increasing compared with the rest of Britain. RICS attributed this to the jitters in the financial services sector in the capital, and job losses at banks and building companies forcing people to sell up.

While the report said the market is the slowest it has been in three years, it pointed out that the situation is not as bad as it was during the property crash in the early Nineties when the number of sales briefly dropped below four a month.

RICS said confidence in the market is still "very negative" and blamed the crisis on "a further reduction in mortgage availability coupled with continued negative news flow".

The report is further evidence of London's worsening housing market. Last week, agents Marsh & Parsons said property prices had fallen 15 per cent so far this year and City analysts Capital Economics forecast prices would fall 35 per cent by 2011.

Brook Green agent Justin Knight, of Bective Leslie Marsh, took part in the RICS survey. He said: "Flats under £500,000 are selling steadily now, as are houses and cottages from £700,000 to £1,300,000. Houses from £1,400,000 to £3,000,000 are almost impossible to sell. We expect at least another five to 10 per cent to come off in W14 and W6. Properties over £3million are relatively unaffected."

John King of Quinton Scott in Wimbledon blamed the problem on jittery would-be buyers. "With so many mixed signals, buyers are still holding back and renting," he said. Noel Flint of Knight Frank in Knightsbridge said: "The market has diverged.

"The mainstream market has slowed with purchasers wary of overpaying on a potential fall in values. At the top end we still have a healthy list of international buyers frustrated at not being able to find anything."

Charles Puxley, of Jackson Stops & Staff in Chelsea, said: "Buyers have never been more cautious and only with extreme reluctance will they commit unless a real bargain is available, and these still are rare in SW3.

"The housing market is in a far worse state than in the early Nineties - at least then there was a market."

Earlier this month, it emerged that London estate agency Chesterton is to axe 40 staff.

One estimate suggests up to 15,000 jobs could be lost because commission income has dried up. Estate agency Humberts has reported a £15.9 million loss in the first half of the year and mortgage broker John Charcol has said it is laying off 39 staff.