Anna Saggerson, 30, a first-time buyer, believes that the only way she will get into the housing market is to buy with a friend and pick up a house at auction. “Finding a house that was previously repossessed might be the only ray of hope at the moment,” she said.

Miss Saggerson, a public relations executive, now renting a room in Denmark Hill, southeast London, is desperate to get a foot on the ladder and is not deterred by falling prices because she believes that property prices in the capital will not fall as far as the rest of the country.

She has £18,000 saved for a deposit and is getting independent financial advice, but is still not feeling optimistic about her chances of owning her own home in the next six months. “I’m off to Paris in a few weeks and I'm planning a bigger holiday in December. I may as well enjoy my life rather than save an extra £100 a month, which will never be enough to buy the house I want."

Miss Saggerson is “slightly scared” by the state of the housing market and is worried that she does not know what will happen to mortgages and house prices in the next 12 months. “I'm glad that I didn't take out a 100 per cent mortgage two years ago. I would have been incredibly stretched financially.”

She believes that it could be worth “taking a risk” now, and could afford to spend £600 to £700 a month on mortgage repayments if she found a property at auction tomorrow.

David Ward, 35, is worried about the cost of feeding his family. The senior manager for PriceWaterhouse-Coopers lives with his wife, Amanda, 35, and two children, Rory, 5, and Naomi, 3, in Carlisle. He keeps an eye out for “3for2” and “Buy-One-Get-One-Free” deals at the supermarket and has recently switched from Tesco to Morrisons to save money. “I'm bulk-buying staples like baked beans, muesli and shampoo whenever they’re on offer,” he says. “Living costs seem to have risen far more than 4 per cent already, and I don't know when inflation is going to stabilise.”

Rising petrol prices are a particular worry for the family because Mr Ward has to drive 50 miles (80 kilometres) to work and back. “It seems like the cost of fuel is going up 1p a litre every day,” he says.

Mr and Mrs Ward have also delayed booking their family holiday this year and are considering a break in Britain instead of flying to the Balearic islands, as they have done for the past few years. Mrs Ward has even been looking at camping equipment.

Graham Smith, 41, and Candice Niven, 34, have swapped the car for two wheels to avoid hefty petrol bills. The couple, who are both physiotherapists, cycle to work whenever possible, although they still need to drive their one-year-old daughter Rosie to nursery.

They have been alarmed by the “gigantic” jump in forecourt prices, particularly in the past six months. Cycling also helps the couple to keep fit since they scrapped their gym membership. Rising food and utility bills were also hitting the family purse and the couple, who have a combined income of about £40,000, have been “cutting costs across the board”, according to Mr Smith. “We certainly don’t go out as much and we’re much more careful about how we spend our money.”

Mr Smith and Ms Niven had planned to raise their daughter Rosie in a new family home, but are struggling to sell their two flats in Newcastle upon Tyne, one of which is a buy-to-let investment. “We’ve had very little interest from buyers. I think it’s going to be next year before we can move,” said Mr Smith.

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