Midlands estate agents are coming under pressure as prices begin to drop in the luxury homes market, it has been claimed.

Upmarket property firm Savills said the credit crunch had seen prices at the top of the market drop by 0.5 per cent in the first three months of the year.

It follows a two per cent fall in prices in the final three months of 2007 as the effects of the credit crunch spread to the once resilient high-end property market.

Harvey Williams, regional spokesman for the Royal Institute of Chartered Surveyors, said the effect on the top end of the market – properties worth £1.5 million and above – was "noticeable".

"It’s different because the people buying and selling these properties have got more flexibility than first time buyers, but nevertheless, we would consider that the credit crunch has had and is having an effect on the top of the market properties," he said. "This time last year people were coming to Warwickshire and Worcestershire from the stockbroker belt and the Home Counties because the values were better, but we’re not seeing that so much now.

"The sellers are probably losing out because they are not getting the asking prices they wanted, and there are definitely fewer deals being done. Surveyors and estate agents are definitely feeling the situation.

"I’ve certainly heard of some agents starting to close branches."

While the majority of the worst-affected properties in the West Midlands were rural piles in places like Warwickshire, Worcestershire and Herefordshire, there were still properties in the city affected, Mr Williams said.

In April, The Birmingham Post reported a large, desirable family home in an upmarket district of Sutton Coldfield had failed to find a buyer after more than 200 visits from househunters.

The house on Rosemary Hill Road, Little Aston, was sold at auction after estate agents could not find a buyer who could secure a mortgage for the four-bedroomed property.

It eventually went for £570,000, £75,000 above the auction guide price, but far short of its original valuation of £700,000.

Bigwood director Jonathan Hackett said: "As the economy continues to stutter, there will be more situations like this, with very desirable properties coming on to the market at relatively short notice.

"House-hunters prepared to do their homework can certainly expect to find really good value deals in the coming months."

Recent research by Debtwire claimed 1,000 estate agents had gone to the wall this year because of the credit crunch-inspired housing market stagnation at a rate of 150 branches a month, with 4,000 job losses.

Removal firms have laid off hundreds of staff after a 26 per cent fall in the number of properties changing hands over 12 months.

Peter Bolton King, the chief executive of the National Association of Estate Agents, said: "The irony is there is no shortage of people who want to move house, but without mortgages they just can’t do so. Estate agents are having to close because there just isn’t enough movement in the housing market and that is likely to have a much wider impact because a healthy housing market is essential for the health of the high street. When no one is moving people tighten their purse-strings.

"The only way things will improve is when banks and building societies start to open up their lending criteria so people can borrow money and then the housing market will start moving again."