The commercial property market suffered its worst month on record in December, according to the key sector benchmark. Financial Times, The Times

IPD index showed a fall of 3.7% in total returns last month, the largest since it began in 1986.

IPD has some £12bn of property derivatives linked to its data, underlying its importance in putting an official number to the losses clocked up in the sector in recent months.

Total returns fell by 5.5% in 2007, the lowest year-on-year figure since July 1991, but the figures clearly show that the summer was the turning point for the market.

Total returns, the combination in capital values and income revenue, dropped 8.5% in the past three months alone.

'The speed of the reversal is unprecedented,' said Ian Cullen, director at IPD, adding the key question was how long this slump would continue.

Investment agents also say that prices continue to fall, although many are hopeful the severity of the downturn will see a bottom reached by the summer.

But Cullen said that the pricing on derivative contracts suggests that there will be another two more years of negative returns.

He warned that it was not clear whether the slowdown in the wider economy will have an impact on property fundamentals, which would see hopes of a sharp but short slump overtaken by a far more problematic recession. Rental growth is still marginally positive, however.