House prices could slip five per cent this year and transactions by 40 per cent unless there is an easing in the credit crunch, the Royal Institution of Chartered Surveyors (RICS) has warned.
In the West Midlands prices are falling at double the UK average but the region is in a better situation than some.
Prices fell 0.8 per cent in March but the West Midlands was ahead of falls in property values in Yorkshire, the South East, East Midlands and Wales.
Year-on-year, prices have risen 1.9 per cent and Harvey Williams, regional housing spokesman for RICS, said: "The West Midlands is faring better than other regions."
However, there are concerns the fall will have have far reaching implications.
With millions of mortgage holders due to come off fixed term deals this year there are concerns debt problems will spiral, with homeowners in even affluent parts of the UK struggling.
This has become evident after a debt advice charity said it was being overwhelmed by demands for help in some of the most exclusive areas.
Transact said the number of people wanting advice was rising across the country, but the increase was most dramatic among the middle classes.
The organisation said the credit crunch was leaving professionals and homeowners in Middle England unable to cope with debts.
It said the situation was so bad in some areas advice centres were turning people away. In affluent areas such as Haywards Heath in Sussex and Congleton in Cheshire, there had been a 100 per cent rise in inquiries over a year. Transact co-ordinator Jamie Elliott: "In the past it was almost uniquely people on benefits, people in social housing who went to debt advice agencies. Since the credit crunch, these services are being overwhelmed by a whole new breed of debtor: middle class people."
A poll by YouGov said almost half of people were being forced to change spending habits to tackle soaring inflation.
The survey paints a bleak picture of Britons preparing to weather the economic storm by cutting back on luxuries - and forced to watch the pennies over basics like food.
RICS chief economist Simon Rubinsohn agreed, saying the ramifications of the credit crunch could be felt beyond the housing market "impacting on a broad range of related sectors, whether high street purveyors of home furnishings and white goods or financial intermediaries involved in providing mortgage advice."
RICS said the market would escape the slump of the early 1990s because of a lower number of distressed sellers compared with 15 years ago, when homeowners were struggling with soaring interest rates.
The shortage of housing - exaggerated by recent decisions from major builders to shelve projects - will also limit the impact of price falls, it has argued.
RICS predicted the second half of 2008 will prove difficult for the housing market with money tight and lenders cautious.
The predictions will do little for the struggling housing market, further dented by Friday's announcement upmarket estate agency Humberts had been forced to suspend shares.
The AIM-listed group has been told to clarify its financial condition.
Meanwhile, agency Reeds Rains - which operates mainly in the north west - is embarking on branch closures.
And business confidence has fallen for the fourth quarter in a row as fears of an economic slowdown loom, a survey by the Institute of Chartered Accountants in England and Wales (ICAEW) found.
ICAEW chief executive Michael Izza said: "The slowdown is no longer just an issue in the City of London. It has spread to all sectors, businesses of all sizes and across regions. Nowhere in the UK is business immune to the fall out from recent issues in the global financial markets."