The chancellor, Alistair Darling, Is under renewed pressure to clarify plans for the proposed stamp duty holiday after a poll of estate agents showed that uncertainty was hitting the housing market.

A National Association of Estate Agents survey found that 92 percent believed that the situation had increased consumer concerns, with people who would have bought a home now considering a delay in the hope of avoiding stamp duty later in the year. The NAEA survey polled 1,350 estate agents, and found that 62 percent had been asked for advice on whether to hold off until the pre-budget statement in the autumn,

Mr Darling has refused to rule out a change in stamp duty after it emerged that officials were considering policies including the temporary deferment of the tax for first time buyers.

“I understandably have been taking a plethora of concerned calls from members, some of whom are already starting to feel the impact this comment has had on ready-and-waiting purchasers,” said Peter Bolton King, chief executive of the NAEA, who believes it would be damaging if the Treasury waited to long to explain its plans.

The Treasury, to revive the housing market, is exploring several ideas as part of an “economic recovery plan”. These idea’s include a new ISA, to help first time buyers save for a deposit, and a scheme that helps homeowners who have lost their jobs pay their mortgages.

According to a report in Thursday’s Local Government Chronicle councils in Barnsley, Ports-mouth, Hartlepool, Essex and Kent have stated their interest in becoming mortgage lenders.

The councils are to lobby ministers for permission to lend to homebuyers for the first time in over a decade. The councils want the rules relaxed so they can borrow from banks in a similar way to housing associations. However, they still face the same problems that banks have become reluctant to lend to anyone in recent months.

“Councils would like the idea of being able to offer mortgages in this way but raising the money to actually do it would be the main issue,” said the Local Government Association.

According to the latest monthly report from the Halifax, house prices fell another 1.7 percent last month, taking the annual rate of decline down from 6.1 percent to 8.8 percent.

The Halifax has calculated that the average house price in the UK is now as low as it was in June 2006 - £177,351.

The bank said that demand from buyers had been “significantly curbed” due to high prices, a lack of mortgage funds, and the squeeze of household finances.

Suren Thiru, the Halifax’s economist, said: “Pressure on householders’ income, together with a very significant reduction in mortgage finance due to the global financial markets crisis, is constraining potential house buyers’ ability to enter the market.”

“This is resulting in both lower prices and activity levels,” he added.

The Halifax survey if similar to that of its mortgage lending rival Nationwide, which recently calculated that UK property prices had fallen by 8.1 percent in the year to July.

Jin June, the Halifax forecast that house prices would probably fall by about 9 percent over the course of the year. However, the new figures suggest that prices have fallen by 10 percent in the first seven months of the year so far.

With mortgage approvals down by 69 percent in the past 12 months, activity in the property market looks likely to fall much further, with many analysts predicting a fall of around 20 percent over the course of this year and the next.

Standard & Poor, the credit ratings agency, suggested that a fall of this magnitude might send 1.7 million households into negative equity, where the size of a borrowers mortgage debt exceeds the value of their property.

Nationwide Building Society reported that for the ninth consecutive month house prices have fallen, leading to the largest year-on-year drop in property values since the early 1990s

In July, house prices were 8.1 percent lower than a year ago, which is the lowest annual rate of inflation since the mortgage lender began producing monthly figures in 1991. The low demand for housing, and the increasing difficulty faced by mortgage applicants, a bottom of the housing decline seems a long way off.

Nationwide’s chief economist, Finnoluala Earley, has taken some comfort in the first signs that the cost of fixed-rate mortgages has started to fall. The financial market expectations of official interest rates have moved from rate rise expectations a month ago to broadly flat interest rates at the end of July.

However, the fall in house prices is accelerating rapidly, according to the Nationwide’s figures. The annual drop in house prices was steeper at 8.1 per cent in July than 6.3 per cent in June. On a three month annualised basis, prices were falling at a rate of 19 per cent compared with 15.6 per cent in June.

Ms Earley conceded that the picture was darker than a month ago. “The weakening economy and poor housing market sentiment do not suggest that the market will recover quickly,” she said.

On Wednesday, Standard & Poor’s published a report showing that negative equity was likely to be less severe than in the early 1990s for any given fall in prices but house price drops were likely to be larger. Analysing a large set of data, S&P estimated that if prices fall about 25 percent from peak to trough, a prediction that seemed extreme a few months ago but now seems reasonable; 1.7 million households would be in negative equity.

Ms Earley said that there as evidence of falling lending to borrowers with low deposits, but tighter credit conditions were just one part of the story of falling house prices.

“There are around 41 per cent fewer first time buyers now than at the same time last year. This may be due to their own desire to delay purchase because they expect prices to continue to fall, or frustration in obtaining finance, but the impact on the market is likely to be the same. That is that chains become longer and have a greater propensity to break down,” she said

She added that the average house price had “fallen £15,000 in the past year and was now only £11,000 higher than three years ago.” The average UK house price was £169,316 in July compared with £172,415 in June and £186,044 last October, the Nationwide said.

According to a survey, house prices in England and Wales have continued their decline last month and are now lower than they were a year ago. Prices fell 0.9 percent between May and June, after the steep 2.5 percent drop of the previous month, Nationwide said today. Its index shows prices are now 6.3 percent lower than a year ago, after eight straight months of decline.

The survey’s release follows data showing mortgage approval numbers – regarded as one of the best guides to the direction of prices – dropped in May to little more than a third of last year’s level.

Fionnuala Earley, Nationwide’s chief economist said, “With house purchase transactions so far below their long term trend it seems unlikely that there will be any rapid turnaround in housing market fortunes in the coming months.”

She noted that volatile markets had led to “more frequent mortgage re-pricing”, exacerbating the previous tightening of credit conditions.

Ms Early said – citing a survey by the Council of Mortgage Lenders – that the fall in transaction volumes has been sharpest among existing homeowners moving house. The proportion of first time buyers ha not changed a great deal, and buy-to-let investors account for a bigger share than average of new mortgage approvals.

Nationwide also published quarterly data showing that over the last three month, prices were lower than a year ago in all regions of England and Wales.

With the south no longer clearly outperforming, the gap between the rate of price change in the north and south of England has narrowed. Although London remains the most expensive area, the capital suffered the first year on year a price fall since 1995.

The only part of the UK where prices remain higher than a year ago – although they have fallen quarter on quarter – is Scotland. Nationwide attributes this to pockets of oil wealth around Aberdeen, and the fact that housing had remained more affordable than in most of the country.

Nationwide say the average UK house price was £172,415 in May, compared with £184,000 in June 2007.

Bradford and Bingley shares have dropped dramatically this morning after the UK’s biggest buy-to-let mortgage lender warned the downturn in the housing market will hit profits this year and that it had secured investment from US private equity firm Texas Pacific Group (TPG) to shore up its finances.

This morning the sale of a 23 percent stake to TPG for £179m was announced alongside a restructuring of B&B’s rights issue, which will see the Yorkshire-based banks raise a further £258m from its existing investors.

Shares will be offered to investors at 55p each. B&B shares were initially suspended and were down 20 percent at 70p when trading resumed shortly after 8:10 this morning.

The deal with TPG is an unprecedented intervention by a buyout firm to help bolster a UK banks finances, and will involve a redrawing of B&B’s controversial rights issue.

“The last few weeks have been challenging for Bradford & Bingley, and this is a disappointing trading update reflecting a more difficult market environment,” Rod Kent, B&B’s executive chairman said.

Analysts have said that B&B’s profit warning will heighten fears of an implosion in the buy-to-let mortgage sector as the housing market deteriorates, and raise the spectre of a buy-out by a rival.

The UK bank was forced to take the extreme measure because its existing rights issue, which was offering shares at 82p each, looked to fail. Plans for the rights issue were initially denied by B&B and investors appeared to reluctant to take the offer up given the state of the UK housing market.

B&B said today that profits will be lower for the financial year, confirming investors’ fears, after it slumped to a pre-tax loss of £8m in the first four months of the year. Its arrears jumped from £23m to £36m.

“B&B has a trading problem. It’s a desperate move, but should ultimately instil some confidence in the company,” said one analyst. TPG’s move might be interpreted as a sign that the worst is over, he said.

Adding to the drama of today’s announcement, B&B’s executive chairman Mr Cranshaw is stepping down due to a “serious cardiovascular condition,” with immediate effect. Rod Kent, B&B’s chairman, will serve as executive chairman until Mr Cranshaw is replaced.

Collins Stewart analyst Alex Potter said last week that the worsening conditions at B&B will have had a significant impact on the rights issue.

Mr Potter said that even if UBS and Citigroup were left carrying the Bradford & Bingley rights issue stock, it would be unlikely to tarnish the Royal Bank of Scotland’s £12bn rights issue or the £4bn issue by HBOS, the owner of Halifax and Bank of Scotland.

According to research by Moody’s, the credit ratings agency, the UK’s banks and building societies could absorb a 20 percent fall in house prices in a year without further denting their capital reserves.

The study, set to be published on Friday, comes as shares in Britain’s largest lenders continue to slide, raising fresh concerns that the investment banks that have underwritten the rights issues for Royal Bank of Scotland and Bradford and Bingley would be left holding a substantial proportion of the new shares.

Now at their lowest level for a decade, RBS’ shares have slipped 2.6 percent to 231.75p. Meanwhile, B&B’s shares dropped almost 7 percent to close at 90.5p, which is just 8.5p above the 82p underwriting price for its £300m rights issue.

The weak share prices reflect growing concerns about the impact of the slowing UK economy and falling house prices on banks’ profits. Investors are starting to believe we could see a repeat of the housing slump in the early 1990s.

The Moody’s research suggests, however, that even if house prices were to fall by a fifth, most banks will have sufficient capitol reserves. A 50 percent fall in house prices however would leave many banks needing fresh capital.

Elisabeth Rudman, a Moody’s senior credit officer said, “We found from our stress tests that the mortgage lenders do have a considerable ability to absorb a substantial downturn in that market.”

As reported late last week, RBS, HBOS and B&B have launched rights issues to rebuild their balance sheets, although these capital raisings have mainly been designed to boost reserves after the banks suffered losses on investments linked to the US mortgage market.

Moody’s said it couldn’t rule out further writedowns at the UK banks until house prices had stabilised.

Falling share prices of RBS and B&B have confounded bankers, who priced the rights issues at a heavy discount in order to increase their chances of success.

The sell-off also hit banks that have resisted the pressure to raise capital. Barclays shares, on Thursday, fell 9.75p to close at a five-year low of 377.5p.

According to the latest Nationwide house price index, UK house prices fell 2.5 percent in May, which is the largest single monthly decline is the index’s history.

Due to the price drop, of the Bank of England’s monetary policy committee even more complex as it struggles to set an interest rate policy which is consistent both with surging inflation and a deep slowdown in economic activity.

The seventh consecutive price drop in the past 12 months makes this decline the longest single period of housing declines since 1992.

House prices, year on year, are now 4.4 percent their levels of May 2007. This is a the biggest fall since December 1992, when UK house prices were falling at a much steeper annual rate of 6.3 percent, in the midst of a severe housing downturn.

“The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market,” said Fionnuala Earley, chief economist at Nationwide.

Ms Earley said that the average price for a house is £8,000 less than this time last year at around £173,583. However, house prices are still 5 percent higher than two years ago and 10 percent higher than three years ago.

Michael Saunders, an economist at Citi, noted that the drop in the price index was consistent with other data, such as that of surveyors’ and housebuilders’ groups which also show a sharp slowing in housing demand.

”Housing demand is likely to suffer a further blow in coming weeks as fixed rate mortgages rise in response to the recent surge in interest rates,” Mr Saunders said in a note.

With data showing inflation is rising faster than expected, traders have scaled back their expectations that the MPC will cut interest rates further.

Mr Saunders pointed out that a key interest rate used to set prices for two-year fixed rate mortgages had risen by nearly half a percentage point since mid-April, and large lenders are already announcing increased rates on their home mortgages.

He noted that historically, house prices and consumer spending have been highly correlated and show a closer link in the UK than in many other countries.

The drop in house prices was not entirely unexpected as Nationwide noted. The Bank of England, in March, reported an 11 percent drop in approvals for new home purchases to 64,000, which is the lowest level of demand since the records began in 1993.