Sales of houses could fall by 40% this year according to a study by the Royal Institution of Chartered Surveyors (RICS).

RICS warned this rapid decline will effect house buyers who are looking for a mortgage as the credit crunch bites.

RICS Chief Economist Simon Rubinsohn said: "This could have important ramifications for the wider economy - not only hitting the property industry directly but also impacting on a broad range of related sectors, whether high street purveyors of home furnishings and white goods or financial intermediaries involved in providing mortgage advice."

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The RICS also said the drastic fall-off in deals could hit consumer spending by more than 8% compared with last year

RICS predicts the fall in house prices will be less severe than that of the early 1990s.

(CD/JM)