Both buyer demand and sales also slumped, with experts warning that things are unlikely to improve any time soon.

RICS says falling property prices combined with high mortgage rates and immense tenant demand is creating an imbalance in the lettings market.

Tenant demand continues to outweigh landlord instructions causing shortage of available rental properties.

The survey indicator for house prices nationally, in terms of net balance, continued to fall from -55 in July, to -68, marking the most negative reading since 2009.

New buyer enquiries declined slightly from -45% to -47% – the lowest level since the Covid-19 pandemic – while new sale instructions also fell, from -17% in July to -26% in August.

Over the year, RICS says the trend in home sales is anticipated to flatten out, shown by the net balance moving from -25% in July to -5% in August.

In the lettings market, conditions remain more positive than the sales market, with a net balance of +47 of survey respondents noting a rise in tenant demand (+59 in July).

However, new landlord instructions fell slightly with a reading of -20 (-19 in July).

Given this mismatch between demand and supply, a net balance of +60% of contributors foresee rental prices being driven higher over the coming three months.

RICS chief economist Simon Rubinsohn says: “The latest round of feedback from RICS members continues to point to a sluggish housing market with little sign of any relief in prospect.

“Buyer enquiries remain under pressure against a backdrop of economic uncertainty and the high cost of mortgage finance.

“Meanwhile, prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period.

“Critically, affordability metrics remain stretched in many parts of the country.

“The other side of the softer demand in the sales market is the continuing strength of rental demand.

“The yawning gap with rental supply is clearly visible in the RICS Rent Expectations indicator which remains close to an all-time high.

“Anecdotal comments from contributors that landlords are leaving the sector suggests the challenging environment for tenants is unlikely to improve any time soon”.

Interactive investor head of investment Victoria Scholar says: “The UK RICS August house price balance fell to -68, below estimates for -56.

“This represents the biggest fall in house prices in the UK in 14 years as the percentage of surveyors see a much greater number of falls in house prices versus rises.

“Following similarly gloomy housing market figures from Nationwide and Halifax, today’s data highlights the dampening impact of 14 consecutive rate hikes from the Bank of England is having on property prices.

“Sellers are less willing to list their properties since asking prices are coming down, and buyers are struggling with mortgage affordability.

“Both factors are contributing to rising rents and falling real estate prices.”

The Mortgage Lender’s chief commercial officer Steve Griffiths says: “Mortgage approvals continue to fall as inflation remains high, albeit down from its peak, applying continued pressure on household finances and impacting affordability.

“The tough credit market looks set to continue with the Bank of England indicating that there could be further hikes to come impacting buyer demand.

“With supply outstripping demand, there is an opportunity for those buyers that are able to press ahead.

“We are also starting to see some rate reductions in the market, and for buyers, flexibility and ensuring they are speaking to a broker is critical to making sure they are aware of all options and capitalising on the best rates available to them.”