The UK housing market is "on its knees", with "little chance of beginning its recovery", according to the latest monthly survey of property asking prices by the online estate agency Rightmove.
The research, conducted after the launch of a Government package designed to stimulate the housing market but during last week's banking meltdown, shows the credit crisis is continuing to have a devastating impact.
Rightmove said asking prices fell by 1 per cent during the first three weeks of September, an improvement on the 2.3 per cent drop seen in August, but still leaving prices 3.3 per cent down on the same month last year.
While the sale price of the average home has fallen by about 12 per cent over the past year, asking prices have fallen at a slower pace, suggesting that sellers have still not fully realised the realities of the market, at least when they first put their properties up for sale.
Activity in the market is virtually frozen, with the lowest number of new listings at estate agents recorded since the Rightmove survey began in 2002. The only benefit of that has been to slightly reduce the number of unsold properties on estate agents' books; down from an average of 79 to 78 per branch, reversing the trend of the last six months. Echoing anecdotal evidence from last week's Bank of England agents' report, Rightmove said what activity there was is being driven by factors such as divorce and death.
"The housing market is on its knees and will remain so until financial institutions address the disastrous state of the mortgage funding markets," warned Miles Shipside, commercial director of Rightmove.
"We are now seeing the lowest level of new sellers for years. While this market provides a good opportunity to trade up, it requires a degree of bravery in the face of the ongoing turmoil in the financial markets."