HBOS predicts house prices could fall by as much as nine per cent this year, nearly double its earlier prediction of five per cent.

The UK''s biggest lender fears there may be a severe correction in house prices, which dropped by 2.5 per cent in May – the biggest monthly fall since the early 90''s, according to ITV.

HBOS said the property market remained "subdued" and it expected the number of property sales to drop by 45 per cent on 2007 levels.

But according to the Building Society Association (BSA), 27 per cent of Brits think that now is a good time to buy as the market value of the average house tumbles.

The BSA said that it is misleading to look at the property sector as one group and added: "While most people don’t believe now is a good time to buy, more than one in four people believe the opposite."

It said the main barrier for people attempting to get on the first rung of the property ladder was the rising cost of mortgage repayments, with 70 per cent saying it was preventing them from buying.