“The lack of mortgage finance has brought the housing market to a virtual standstill, with first-time buyers rapidly becoming an endangered species,” said Ian Perry of Rics.

There were just 14.4 completed sales per surveyor on average during the three months to the end of July - a new low and down from June's survey figure of 15.3.

There was, however more "realism" in the market, with sellers dropping their asking prices, Rics reported. This suggests that sales might pick up in the coming months, as sellers are starting to re-evaluate asking prices which surveyors consider to be unrealistic.

Many more surveyors believe that prices will fall in the next three months than rise.  In England and Wales, this feeling was particularly strong in Yorkshire, Humberside and the North.

RICS said the housing market could see a further setback if the government does not clarify its position soon on whether it plans to suspend stamp duty on house purchases.

The government's figures on the state of the property market are expected today.

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