Price declines recall the recession of the Nineties

House prices are falling at their fastest rate since the recession of the early 1990s, the Royal Institution of Chartered Surveyors (Rics) has warned.

Confidence is ebbing, with the "house price balance" – the proportion of surveyors reporting increased house prices – falling to minus 49.1 in December from minus 40.6 in November and marking the biggest negative balance since November 1992.

Meanwhile, fewer people are looking to buy a property, with 25 per cent more surveyors reporting a fall rather than a rise in enquiries.

"The coming months will be of great importance to the market and many would-be buyers will be watching the Bank of England's interest rate decisions while lenders remain reluctant to part with finance, said Rics spokesman Ian Perry. "The Bank may have to cut rates further to maintain stability in the market, which is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007."

But there was some more positive news, he added. "While sentiment seems to have reached its lowest ebb, the underlying economic conditions are vastly different to what the country experienced in the early 1990s. Supply would have to loosen considerably before prices took a significant dip."