New figures show that house prices are falling at their fastest rate for two years as buyers give the market a wide berth.

According to the Royal Institution of Chartered Surveyors (Rics), the cost of UK property fell for the second consecutive month in September.

And the number of people looking to buy a house fell for the 10th month in a row and at its fastest rate for four and a half years.

The group's data shows that overall 14.6% more surveyors reported a drop in house prices than those who said there had been a rise, a further fall from the 3.3% more who said prices moved down during August.

Rics said the fall seen during September was the fastest decline since September 2005, when 19.4% more surveyors reported a drop in the cost of property than those who saw a rise.

Five interest rate rises combined with mortgage firms tightening their lending criteria in the face of the global credit crunch is affecting already stretched buyers, the group said.

This contributed to 51% more surveyors reporting a fall in people looking to buy a home, down further from the 39% who had seen a reduction in August.

And surveyors are not optimistic about the outlook for both prices and buyers going forward, with expectations for house price growth reaching its lowest level since May 2005.

Rics spokesman Jeremy Leaf said: "Although house prices continue to fall, the underlying economy remains strong. A major correction in the market seems unlikely while economic growth is above trend and employment conditions remain buoyant.

"The combination of rising interest rates, the introduction of HIPs and volatility in the financial markets resulting in tightening of lending criteria, has certainly affected the confidence of buyers and sellers.

"As a result, some would-be buyers are turning to the rental market whereas others, conscious that the next move in interest rates is now likely to be down rather than up and market meltdown is highly improbable, are seizing the opportunity to negotiate with more flexible vendors in a less competitive marketplace."

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