The Royal Institute of Chartered Surveyors (RICS) said that the UK house price index hit a four month low as lending restrictions and concerns about the economy dented people's confidence.

The number of real-estate agants and surveyors saying prices fell exceeded those seeing gains by 23 percentage points, the lowest reading since January.

The demise is being put down to confidence in the hosuing market weakening as the government embarks on the proposed spending cuts.

While a lack of property supply has helped to underpin home values, rationing of bank credit continues to curb demand, with mortgage approvals falling to a four-month low in April.

RICS spokesman Ian Perry said: "Buyer interest in purchasing property remains flat across much of the country and there is little sign of this changing any time soon."

He added: "Uncertainty over the economic outlook remains as important as the availability of mortgage finance in depressing demand."