Homeowners face a second fall in house prices as the recovery in the property market slams into reverse.
Experts today warned that values will decrease again over the next 18 months following a year-long rally.
A flood of homes coming onto the market is depressing prices as demand fails to pick up.
Potential buyers nervous about job cuts and tax rises are reluctant to take the plunge.
Bank lending remains subdued, meaning others are struggling to get a mortgage.
Forecasters at IHS Global Insight now expect house prices to fall by 3% to 5% in the second half of 2010 and by a further 5% to 10% in 2011.
Deutsche Bank is still predicting a 6% rise in prices this year but warns values will fall in 2011 as interest rates rise.
Property website Rightmove said the average asking price for a home in England and Wales fell by 0.6% to £236,332 in the four weeks to July 10, the first decline this year.
It warned that the 7% rise in house prices since January, which added £15,500 to the average value of a home, will be wiped out by the end of the year.
Howard Archer, chief European and UK economist at IHS Global Insight, said: "We had expected house prices to be essentially flat overall through the second half of 2010.
"However, a modest relapse is looking ever more likely. Furthermore, it is hard at this stage to be optimistic about house prices in 2011."
