House prices have fallen 2.5 per cent this year, as potential buyers go on strike, and transactions sink close to a thirty-year low. The average value of a property — at £170,500 — is now 3.2 per cent lower than it was in June last year.

Richard Donnell, director of research at Hometrack, said that the number of buyers was down 5.7 per cent in a month and the number of completed sales now looked “set to reach levels not seen since the 1970s”.

Hometrack had predicted 1.17 million successful sales this year, down from 1.4 million last year. But the property data website now fears that there will be as few as 800,000 transactions, little more than the previous low of 784,000 in 1974, just after the secondary banking crisis in the aftermath of a property bubble.

Hometrack surveys estate agents — including those areas where there are few or no transactions — to build an impression of the state of the market. Its agents are now reporting that prices are falling in 83 per cent of the country, compared with 53 per cent of the just a month ago.

Hometrack believes that a rush of homes for sale, but no corresponding increase in willing and able buyers, has undermined prices. Mr Donnell said: “It seems inevitable that prices will continue to post modest falls until such time as confidence improves.”

But the sharp reduction in successful sales, and the lower prices being achieved, may now have slowed the flow of property: the number of new homes for sale was up 1.4 per cent this month, down from an average increase of 5 per cent a month since February.

It is now taking just over ten weeks to sell a home, two weeks longer than at the start of the year, and sellers are being obliged to accept 91.6 per cent of their asking price, down from 93.5 per cent in six months and the lowest levels since the Hometrack survey began in 2000.

The worst-affected area is London, where prices are 1.3 per cent down in a month. The housing market boom continued much longer in the capital, thanks to interest from international buyers, but despite the ongoing strength of the super-prime market — or those homes priced over £10 million — confidence in the capital has slumped.

The number of new buyers in London has dropped 6.8 per cent in a month, and sales are being agreed at an average 91.1 per cent of the asking price.

Hometrack’s survey suggests that, after longer exposure to the current downturn, the decline in conditions and prices is now milder in the North and North West, where prices are down just 0.3 and 0.6 per cent respectively.

Mr Donnell said: “Half of all transactions in recent years have been driven by aspirational movers who are now sitting on their hands. This sort of buyers’ strike can only last 12 to 18 months, and then sellers will have to move because of personal reasons, such as death, divorce and job changes even if that means accepting a lower price.”

Explore Property

• Buying & Selling

• New Homes

• Overseas

• Interiors

• Investment

• Gardens

• Cool In Your Code

• Specials

Times recommends

• Analysis: frustration for everyone - except investors
• Spanish property: why it's crunch time on the Costa del Sol
• Buy-to-let: professional investors cash in on the credit crunch