The gloom enveloping the UK housing market is also dimming the outlook for high street spending as consumer confidence weakens in the face of declining property prices and as households find their spending power eroded by rising petrol and food bills.

Amit Kara, economist at UBS, warns that UK house prices could fall 20 per cent in nominal terms from peak to trough, a worse outcome than the 12 per cent decline seen in the early 1990s.