The number of houses sold in September fell by 53 per cent to a three-year low compared to last year as Britain's housing crisis deepened.

Only 59,000 residential properties worth more than £40,000 were sold last month - the lowest since 2005 - compared to 126,000 in September 2007, as the number of mortgages issued plunged.

Yesterday, it emerged that the total amount of mortgage lending by banks and building societies fell to just £17.7 billion in September, the lowest monthly figure for more than three-and-a-half years, according to figures from the Council of Mortgage Lenders (CML).

The estimated figure for gross mortgage lending in September was down 10 per cent from August alone, and over 40 per cent down from September 2007.

The number of mortgages approved has fallen during the credit crisis as banks become more reluctant to lend to homebuyers. People are also more reluctant to buy new properties due to falling house prices.

The Government hopes that radical measures to recapitalise UK banks will help revitalise the housing market.

Howard Archer, chief economist at Global Insight, said: “More forward-looking indicators do not make any more pleasant reading, with latest mortgage approvals and lending data sinking to new long-term lows as housing market activity continues to be suffocated by very tight lending conditions and still-stretched affordability ratios.”

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