Britain's housing market was hit by a fresh blow yesterday when it emerged that home sales plunged to a new low last month and the Nationwide Building Society said that its net mortgage lending had fallen by 70 per cent over the past six months.

The latest survey from the Royal Institution of Chartered Surveyors (RICS) showed that estate agents in England and Wales had sold an average of only 10.9 properties per firm in the 12 weeks to the beginning of November, with agents in London struggling to sell one house a fortnight. That is the lowest level of sales since the series began in 1978.

Nationwide, Britain's biggest building society, gave warning that, while its market share was slipping, the entire mortgage lending market would fall by 80 per cent this year.

Net new mortgage lending by Nationwide fell from £3.6billion to £1billion in the six months to September. Its share of the mortgage market slipped from 6.2 per cent to 5.6per cent.

Graham Beale, Nationwide's chief executive, challenged the Treasury claim that the society, along with the other seven banks taking part in the Government bailout plan, was obliged to maintain mortgage availability at 2007 levels. “There isn't a condition that says ‘Thou shalt lend at 2007 levels',” he said.

Hope is rising that the Bank of England's 1.5 point cut in the base rate last week may help to boost buyers' confidence. Experts said that “vulture buyers” - new buyers who settle only for a cut-price home - have already been tempted back to the fray.

A spokesman for RICS said: “Distressed sales are becoming a factor now. People are having to sell their homes because they cannot afford their mortgage or for other financial reasons and they are getting real about the price they can achieve.”

Home sales have been falling for more than a year as banks and building societies reduce mortgage lending to protect their margins during the credit crunch. Borrowers with a small deposit or a less than perfect credit record now struggle to get a home loan.

Many homebuyers are attending auctions in the hope of snapping up a bargain-basement property that has been repossessed by a bank. The number of reposessions is expected to rise by 50 per cent this year to 45,000.

About 20 per cent more estate agents now expect sales to increase, rather than decrease, in coming months as a result of more repossessed properties coming on to the market, RICS said.

A rise in sales would be a boost for estate agencies, which have been hit hard by the housing market downturn. Last week Standard & Poor's, the credit ratings agency, downgraded the rating of Countrywide, the UK's biggest estate agency, over fears that it could run out of cash in the next 12 months.

However, rising transactions will not soften the blow to homeowners. House prices, which have fallen 15per cent in the past year, are set to tumble further. Mr Beale forecast that prices would keep falling by 1 to 1.5 per cent a month well into 2009. He said that souring sentiment, particularly fears about job security, and a lack of credit would continue to depress prices but at some point falling capital values and lower loan costs would lead prices to bottom out. Some economists expect prices to fall 35 per cent before rebounding.

The mortgage market's seizure was highlighted yesterday as lenders continued to withdraw mortgage deals in spite of last week's base rate cut. There are now 2,989 deals available, down a fifth from 3,747 last week, according to Moneysupermarket.com.

There were more than 30,000 home loans on offer before the credit crunch began last summer.

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