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LONDON (Dow Jones)--Sentiment in the U.K. housing market is at its weakest since 1992, when property prices were undergoing a protracted slump, according to a survey released by the Royal Institution of Chartered Surveyors Wednesday.

However, RICS cautioned that the economy is in much better shape than it was in the early 1990s, a period that included the U.K.'s last recession. It added that a significant decline in house prices is unlikely.

The RICS survey showed that, in seasonally adjusted terms, the proportion of surveyors reporting a fall in house prices exceeded the proportion reporting a rise by 49.1 percentage points in December, compared with a negative balance of 40.6 percentage points in November.

It was the fifth straight month in which the balance was negative, which indicates that the market is weakening.

The negative balance was larger than expected. Economists surveyed by Dow Jones Newswires last week had expected it to be 46.0 percentage points.

RICS said the housing market is showing the effects of tighter credit availability following the seizing up of global money markets since August 2007, which came on top of five rate hikes by the Bank of England between August 2006 and July 2007.

"The housing market is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007," said Ian Perry, a spokesman for RICS. "While sentiment seems to have reached its lowest ebb, the underlying economic conditions are vastly different to what the country experienced in the early 1990s. Supply would have to loosen considerably before prices experience a significant dip."

There are indications that supply is increasing, with instructions to sell up for the first time since May 2007. And demand remained subdued, although less so than in November and October.

As a result, the stock of unsold property on surveyors' books jumped by 7.1%, following a 9.1% rise in November.

Against that background, RICS said the market may not stabilize without further cuts in the Bank of England's key interest rate.

"The coming months will be of great importance to the market and many would-be-buyers will be watching the Bank of England's interest rate decisions while lenders remain reluctant to part with finance," Perry said. "The Bank of England may have to cut rates further if the market is to remain in a stable condition."

The BoE's Monetary Policy Committee cut its Bank rate to 5.5% from 5.75% in December, and left that rate unchanged in January. Economists expect the MPC to cut again in February, and on a number of other occasions throughout the year as the credit crunch weighs on the economy.

The RICS survey is broadly in line with measures of house prices, which have recorded declines over the last few months. However, the Halifax House Price Index recorded a rise of 1.3% during December, although the Nationwide Building Society's measure recorded a 0.5% drop.

-By Paul Hannon, Dow Jones Newswires