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Overall 36.5 per cent of the 3,000 people surveyed last month (August) stated that they feel their homes may enter negative equity.

This is despite a recent study Standard & Poors predicts that only one in seven UK homeowners might face the reality of negative equity in the coming year if house prices continue to fall.

Meanwhile, Barnetts found that a further 33.6 per cent of those questioned had altered their plans for buying or selling a property in the next 12 months as a direct result of the credit crunch.

Tony Swift, conveyancing partner at Barnetts, said: "This is another clear indicator of the lack of public confidence in the resilience of the housing market and the encroaching impact of the credit crunch on decision-making.

"In my view the public perception of the state of the housing market is as important a factor in our future economic recovery as anything else. Where there is a lack of confidence, people who might otherwise have been in a position to invest in property will be reluctant to enter the market.

"Although the Government’s long-awaited interventions will have some impact, it is time for the industry to pull together and take action to help restore public confidence. House prices are cyclical in nature but the fall-out from a massive further fall in confidence is something we can’t afford to let happen."