Land Registry figures show house prices down 2.2 per cent in September

The average house price in London now stands at £328,927 in September, with the latest volume figures showing that transactions have gone from 15533 in July 2007 to 6210 for July this year, down 60%. London prices are 1.5% down for the month of September and 6.1% down for the year to September.

Average monthly sales volumes across the country for April to July fell from 110,828 last year to 57,887, a decline of 48% year on year.

The worst hit area in September was Wales where prices declined by 5.5%, meaning they are now 10.7% down on a year ago.

The one bright spot over the last year has been Hartlepool where prices have risen by 4.7%.

In response to the figures, Capital Economics said: "With unemployment now rising sharply, economic activity contracting, and mortgage lending criteria still tightening, the pace of house price falls is set to intensify. We expect house prices to drop 20% next year."

Ross Bowen, managing director of Connells S&V commented: “Buyers hold the cards at the moment and sellers are much more flexible on asking prices. As long as you have a good deposit, it's easy to get a real bargain right now.

After months of inactivity there is huge pent up demand to move. Interest rates are going to tumble fast and as the banking system gets back to normal, prime borrowers will find mortgages getting very cheap. We expect to see activity levels really pick up in the housing market early next year, and even though prices will take a bit longer to respond, braver buyers should do well.”