The slump in the commercial property market deepened last month as the crisis crippling financial markets hit funding streams.

Property consultant Savills today said office development fell in September as projects were starved of cash by banks cutting back on lending and confidence in the UK economy collapsed.

Savills said just 7% of commercial developers reported a rise in activity last month compared with 48% indicating a fall.

The balance of minus 41% was the lowest since the Savills report started in 2003.

Confidence also tumbled to a record low as developers anticipated that turmoil in the financial markets will further stifle lending and reduce demand for office space.

Mat Oakley, head of commercial research at Savills, warned that the Treasury bailout and emergency interest rate cut would not solve developers' problems but "are small steps in the right direction".

He said: "We expect the funding environment to improve in 2009. However, development finance will remain hard to obtain."