Although the latest monthly fall was lower than in July, when prices went down by 1.2 per cent, over the whole year average prices decreased by 5.3 per cent.

While sellers bemoan the fall in value of their homes, buyers are benefitting from dramatic discounts on property, with the average sales price falling to 90.7 per cent of the original asking price. This is significantly lower than the average 95.7 per cent of the asking price houses were sold for in the spring of 2007.

According to Hometrack this proportion is a key indicator of property pricing, and house prices are likely to continue falling unless sales prices pick up again and rise over 93 per cent of the asking price.

Richard Donnell, director of research at Hometrack comments: “While demand remains weak with continued falls in new buyer registrations over August, a small but growing proportion of agents are reporting some improved signs of buyer interest on the back of lower prices and a modest reduction in the cost of mortgages.”

He predicts: “This trend could well become more evident over the autumn as we continue to move towards more realistic levels of pricing.”

Obviously sellers are losing out at the moment which shows a fall in the number of houses coming onto the market and in the time properties stay on the market which now averages 11.3 weeks. This was particularly noticeable in August when demand is traditionally low anyway because of the holiday season, Mr Donnell explains.

He concludes, “While the evidence from the latest survey suggests that the level of price falls may be starting to moderate, a recovery in the housing market – even back to zero monthly growth – is still some way off. The reality is, buyers are not likely to return in any volume until they begin to see value in their local housing markets.”

The other hitch is the restricted availability of mortgage finance for would-be buyers without a big deposit, although there are some glimmers of hope as mortgage lenders have started cutting their interest rates significantly in the last few weeks.

The past week has seen new interest rate cuts from a number of major mortgage lenders such as Halifax which have lowered their rates by up to 0.4 per cent including deals for people looking to borrow up to 90 per cent of the value of their property. Barclays, Abbey, Nationwide and Britannia Building Society have also dropped their rates.

© Fair Investment Company Ltd