A growing belief that property prices are falling is deterring both sellers and buyers, leaving UK housing-market conditions at their loosest since the mid-1990s, according to a survey published on Tuesday.

Confidence in the outlook for house prices has plunged in the past month, the monthly report by the Royal Institution of Chartered Surveyors (Rics) shows.

Ninety-five per cent more surveyors thought prices were falling in their area in April than those reporting a rise, compared with a balance of 79 per cent the month before. A balance of 80 per cent expected prices to fall further.

The finding – the most pessimistic since the survey began in 1978 – may have been accentuated by Rics’s seasonal adjustment process, since April is normally a busy month for estate agents. Unadjusted figures showed a balance of 82 per cent of surveyors thought prices were falling.

Simon Rubinsohn, the institution’s chief economist, said the figures indicated a downturn affecting all areas of the country, whereas the housing crash of the early 1990s had been skewed towards southern regions.

The sales-to-stock ratio, seen as one of the best indicators of market slack, fell from 24.6 per cent in March to 21.1 per cent in April – similar to its level at the start of the 1990s downturn and the lowest since 1996.

Spending slows

Consumer spending growth has slowed sharply since the start of the year, according to an industry survey showing clothing and furniture sales have been especially hard hit .

The British Retail Consortium reports on Tuesday that the value of total retail sales was 1.9 per cent higher in the three months to April than the same period last year, with growth slowing from 3.5 per cent in the three months to March and a peak of 5.7 per cent in March last year.

Like-for-like sales have fallen for the past two months, although the timing of Easter made comparisons difficult for March and April.

Loose market conditions appear to reflect a growing reluctance among both sellers and buyers to strike a deal when the outlook for prices is so uncertain.

Rics said fewer homeowners were selling property in all regions except London, the South West and Yorkshire, while inquiries from new buyers were falling at the fastest pace in the 10 years it had records for. The level of completed property sales in the three months to April was a third lower than a year earlier, after 12 months of contraction.

The dearth of new instructions suggests that few people are being forced to sell – a fact that may support prices in the short term.

But prospective buyers will be discouraged by toughening credit conditions. New Bank of England data show the rates that lenders quote for fixed-rate mortgages diverging further from official interest rates.

The average two-year fixed mortgage rate for a borrower with a 25 per cent deposit rose from 5.8 per cent to 6.08 per cent between March and April, when the Bank cut rates to 5 per cent. For a borrower with only a 5 per cent deposit, the average quoted rate for a two-year fixed mortgage rose from 6.6 to 6.94 per cent.

“The repayment shock for some borrowers will be significant,” said George Buckley, a Deutsche Bank economist, who expects nominal house prices to fall 15 per cent on the Nationwide and Halifax indices.

Even if credit conditions improve, a belief that prices will fall further could deter buyers and sellers who do not need to move, prolonging the downturn.

“There is no doubt that the only people looking to buy in Fulham are those who have a specific reason to do so such as a job move or change in family circumstances,” said Robert Green, a London-based surveyor.

John Halman, a surveyor at Gascoigne Halman in Cheshire, was more succinct: “No credit, no confidence, no customers,” he said. “It’s time to hold your nerve.”