Home sales fell to their lowest level in 30 years last month as the seizure in the mortgage market continued to drag house prices down.

Estate agents reported that they sold an average of 15 properties in the three months to the end of June, figures from the Royal Institution of Chartered Surveyors (RICS) show. That is nearly 40 per cent lower than the same period last year and the lowest figure recorded since RICS began its series in 1978.

House prices, which have been dragged down as sellers are forced to slash their asking prices to attract buyers, remain at near record lows, the RICS figures suggest.

The balance of surveyors reporting house price falls rather than rises was 88 per cent in June, only a slight improvement from 92.2 per cent in May. All surveyors in the West Midlands said prices were falling, while a balance of more than 90 per cent said prices continued to fall in Yorkshire and Humberside, the East Midlands, East Anglia and the South East. In London, 75 per cent reported price falls.

While falling house prices should be encouraging more buyers to the market, the number of new purchasers is being suppressed by a lack of home loans. Jeremy Leaf, of RICS, said: “Transaction levels remain incredibly low with many buyers cut out of the process by tight lending conditions.”

Mortgage lenders are demanding hefty deposits from first-time buyers as they attempt to protect their profits in the wake of the the credit crunch. Buyers who do not have the cash for a deposit of more than 5 per cent will find it impossible to secure a mortgage deal, while the best mortgage rates are reserved for those who have a downpayment of 25 per cent or more.

A balance of 35 per cent of surveyors reported falls rather than rises in buyer inquiries during June in England and Wales, while 14 per cent more surveyors reported falls in Scotland. The outlook for the housing market also remains gloomy, with nearly 70 per cent of surveyors in England and Wales expecting prices to fall.

However, there was a glimmer of hope as sales expectations improved for the second month in a row, although it still remains in negative territory.

The lack of activity in the housing market is not only having a knock-on effect on firms of surveyors and estate agents, many of whom have had to cut jobs, but also housebuilders who are set to axe thousands of jobs.

Recent data from Halifax and Nationwide showing annual house price falls of more than 6per cent has prompted some economists to revise down their housing forecasts for the coming years.

Global Insight forecasts house prices to fall by 15 per cent in 2008 and 12per cent in 2009, resulting in a 26 per cent drop in house prices since their peak in August last year. Capital Economics forecast a 35 per cent drop in house prices in the next three years.

This gloom was echoed by surveyors across the UK.

Malcolm Parker, of Joplings Estate Agents in North Yorkshire said: “The market is as depressed as I have known it in over 30 years. The squeeze on lending has had a profound effect. The signs are that the rest of 2008 will be very difficult.”

Jeremy Dell, of JJ Dell in Oswestry, said: “Restricted credit, high mortgage fees and expectations of lower property values equals the most difficult market for over 25 years.”

However, the Government is more upbeat about the housing market. A spokesman for the Department for Communities and Local Government said: “The long-term demand for housing remains high and the fundamentals of the economy are sound with low unemployment and historically low interest rates.”