One of the country’s largest estate agents yesterday announced the loss of hundreds of jobs, sparking fears that the property slowdown will force wholesale restructuring in the rest of the industry.

LSL Property Services, owner of the 290 Your Move offices, revealed that it had closed 12 branches and cut 315 full-time jobs across its surveying and estate agency businesses, after house sales fell in a weakening property market.

The cuts are the first large-scale redundancies in the sector, which employs 50,000, since the property slowdown began late last year.

Dean Fielding, LSL’s group finance director, said: “It is very difficult to see where the market is going to land. Our larger competitors are doing similar things. They have no choice.”

Agents blame a sharp drop in the level of transactions since September for the industry’s difficulties. They believe that if the slowdown continues many of the 8,750 estate agency firms in the UK may be unsustainable, irrespective of whether house prices fall significantly.

Hometrack, the data company, says that transaction volumes have been the first casualty of the recent housing market turbulence, which began in September as Northern Rock’s trouble became public but worsened into the final months of the year.

Hometrack expects the number of transactions to drop 17 per cent this year, down from 1.2 million. Many buy-to-let investors, who make up a tenth of the market, are thought to be holding on for changes that may come in during April, which should allow them to reduce their capital gains tax bills.

LSL said that its transaction volumes, which it had expected to drop by 20 per cent, fell by a third in the second half of 2007. The company, which is in line to make pretax profits of £33.5 million for 2007, says it expects conditions to be challenging well into this year.

That view was echoed by rivals. King Sturge, the property company, said that although widespread falls were not expected the industry faced its toughest year since 1991.

John Socha, the vice-chairman of the National Landlords Association, said that the market was slowing across the board and “the cannier estate agents are acting now”.

He said that, after almost a decade of growth in the sector, the industry was at its most vulnerable in the Midlands.

“It is the places where the cost of entry, such as renting an office, is the lowest that are in trouble – perhaps cities like Leicester, Milton Keynes,” he said.

“In Northampton, a city of 200,000, there are 60 estate agents’ offices, of which 15 branches are owned by one company. I don’t see how that can pay if there is any foot applied to the brake in the housing market.”

Stewart Lilly, president of the National Association of Estate Agents, said that larger agents were first to act when there was any slowdown, as their costs were higher.

He said: “It is disappointing that a lot of people have panicked. We are in for a difficult year, but we have had them before.”

Robert Bryant-Pearson, chief executive of Allied Surveyors, said: “We could see back in October that it was going to be a hard winter, but the mood had lifted with the interest rate cut before Christmas. Now it is the number of transactions rather than house prices that is the problem.”

He said agents that were more heavily focused on apartments and former local authority buildings looked vulnerable.

Shares in LSL closed 1p lower at 138p, valuing the company at £145 million. Its plight also took a toll on the upmarket estate agent Savills, which dropped 22¾p to close almost 8 per cent down at 270p.

LSL, once known as General Accident Property Services, was floated in November 2006, after a management buyout from Norwich Union in 2004. It owns the Chancellors Associates and Barnwoods surveying firms and 140 Reeds Rains estate agencies.

Apart from some South London offices, it is best represented in the North of England, which was the first region to suffer the slowdown. Mr Fielding of LSL said that the cuts were “geographically spread, but more southern based than northern”.

Harris Associates, an activist US investor, has built a big stake in the company, perhaps on the hope of a takeover bid.

Mr Fielding said LSL was currently working on the launch of a repossessions arm.

Meanwhile the Land Registry yesterday unveiled house data showing that prices were up 0.6 per cent in November to an average £186,009.

Seema Shah, a property economist with Capital Economics, said: “Given the lagging nature of the Land Registry house price index, it will take longer for it to show the housing market correction which is now evident in other house price indices.”

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