Property 'will fall by 10%'

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Douglas McWilliams, head of the Centre for Economics and Business Research, said the "extraordinarily bad" images of savers queuing in the street would hit confidence, leading to a downturn in consumer spending this autumn. This will result in a sharp fall in economic growth, feeding straight through to property prices. He said: "House prices will probably fall by about 10 per cent."

It is the most downbeat assessment yet - most commentators believe this year's rampant house price growth will merely slow.

The buy-to-let market looks particularly vulnerable because lenders see it as riskier. There are also signs that the credit crunch could hit funding for major developments. The company behind the planned £1 billion Shard of Glass tower near London Bridge said today the problems in the markets were hampering negotiations to secure funding.