Click here to see how regions will perform in the next five years

It’s official: summer is over. The children are back at school, your tan is fading fast and sandy beaches are a distant memory. Normally, the first hint of autumn chill means the housing market bursts back into life after the holiday lull. Not this year. Instead, estate agents are drumming their fingers on their desks or shutting up shop completely.

There is talk of crisis – so much so that the government, after much dithering, last week finally announced a series of measures to get things moving again, including the raising of the threshold at which stamp duty starts to be paid, from £125,000 to £175,000. The immediate, if predictable, response from the industry has been “too little, too late”.

Quite how sharply the property market is falling is a matter of dispute: the latest figures from Nationwide and Halifax show double-digit annual declines, while, according to the Land Registry, house prices are down only 2% since last year – a discrepancy due in part to the varying time lags in compiling the data and in part to the fact the mortgage lenders’ figures only cover transactions involving borrowing.

Whichever figures you take, though, there is no doubt we have still not hit the bottom. A fall in mortgage approvals has compounded the gloom – the number of new home loans has dropped more than 70% in the past year, and only 33,000 mortgages were granted in July, compared to 114,000 in the same month last year. In a rare glimmer of light, viewings are up: on the day the government made its announcement, the property website Rightmove reported a 10% increase in traffic.

While some homeowners are choosing to let out their homes rather than sell, in the hope of a quick rebound, others, such as Jon Williams, have decided to bite the bullet. Williams, 27, an IT consultant, is so afraid of falling into negative equity he has put his one-bedroom flat in Haslemere, Surrey, on the market. “I don’t want to be stuck with it for another five years,” he says. He plans to buy somewhere in the area with his girlfriend, Gemma Taylor, 36, who runs a holistic and wellbeing shop. She is selling her two-bed townhouse in Guildford, and together they have £400,000 to spend. “Hopefully, having another party will minimise the risks,” says Williams.

If you need to sell, it would be wise to try to do so sooner rather than later: commentators are almost united in predicting things will get worse before they start to improve. “We’re anticipating a 25% fall over 2008 and 2009, of which about 10% has already occurred,” says Lucian Cook, director of residential research at agents Savills. He expects the market to overcorrect next year: in the same way that values went higher than were sustainable last year before falling back; they will probably drop lower before things pick up.

Researchers at agents Knight Frank see a drop of another 5% this year as the most optimistic scenario, but believe prices could even fall 15% between now and the end of December. Capital Economics, a research consultancy, also expects a further 15% decline this year. Inevitably, areas of the market will perform differently - so what’s happening where?

Generally, the lower end of the market is still the worst hit, because of buyers’ greater dependence on mortgage finance. This looks unlikely to change in the short term. According to recent findings from the bank GE Money, 3.4m borrowers have been turned down for a mortgage or loan in the past 18 months; one in eight of them had to apply four or more times before being accepted. The changes to stamp duty may help things a little – although largely outside the southeast where property prices are lower. “Changes to stamp duty will do the London property market a fat lot of good – we’ve only sold two properties under £175,000 since 2004,” sniffs Iain Currie, managing partner of Thomson Currie, agents in Islington, northeast London.

Period properties are surviving the downturn surprisingly well and look likely to continue to outperform new-builds. Research from Hamptons shows the prices of pre1900 properties it has sold have actually risen by 0.3% to an average £927,306 since June. New-builds, especially city-centre schemes, have been hit hard. A further blow may come from a new requirement by lenders (reported here last week) that developers declare incentives they have been giving to encourage sales, which have been artificially supporting prices. The offer in the government package of a 30% interest-free loan to anyone with a household income of less than £60,000 who wants to buy a new-build property may help, though.

Certain parts of the country have been hit harder than others – but may also recover more quickly. The east of England, for example, has seen a 7.2% fall in prices over the past 12 months, with a further 5.2% before the end of the year, according to exclusive research by Knight Frank for The Sunday Times. By contrast, prices in the southeast have already fallen 11.8% over the past year, but have only a further 3.3% to fall. Scottish homeowners have been affected the least – prices have fallen a mere 5.8% over the same period and are predicted to fall only a further 1.5%.

A lucky few – those who live in the right street or postcode – can rest secure in the knowledge that their home has not dropped in value. This is especially the case in mid-market locations outside southern England, where prices rose sharply between 2001 and 2005, but then flattened out over the following two years. Examples include Penrith near the Lake District, and Hex-ham and Corbridge, outside Newcastle, according to analysts Hometrack.

It may be little consolation to us mere mortals, but the £10m-plus market is holding up. According to Knight Frank, prices rose by 1% in July and 2.9% in August – meaning super-prime homes are valued at 19% more than a year ago. While this is mainly a London phenomenon, the best properties in the countryside are also holding their value. “We’re still getting gazumped on the right houses,” says Rupert Sweeting, head of Knight Frank’s country department.

Looking ahead, most commentators expect prices across the country to be rising again by 2011 – although initially at less than the rate of general price inflation. Figures compiled by Knight Frank for The Sunday Times (click here to see figures) show London, the northwest and the southeast experiencing the strongest bounce back. So what does all this mean if you are thinking of moving?

Buyers If you can obtain the finance, now could be a good time to buy – provided you do not overpay. “The market’s not dropping, it’s dropped,” says Andrew Weir, central London area director for Foxtons. “With that in mind, the time to buy is now – otherwise you might miss out.”

Rightmove reports that unsold stock numbers have risen to record levels – the average estate agency branch has 78 properties on its books. Miles Shipside, commercial director of Rightmove, says: “There’s a lot more choice in a slow market. If you get the person who wants to sell for a reasonable price, you can get a good deal.”

Shipside’s tips? Look at people’s motivation for moving – parents who need to sell before a new school term starts, a divorcée who needs to release equity fast. Don’t be afraid to put an offer in, and if a property you like is overpriced, keep tracking it – the longer it stays on the market, the more a vendor will be open to offers.

Sellers Those who want to upsize are in a good position: the price of the more expensive property you want to buy will probably fall by more than the hit you will have to take on the sale of your own home. That is why Tarek and Kate Shirazi have decided to put their three-bed, Grade II-listed cottage in Devon on the market now. “We’ve kind of outgrown the house,” says Kate, 42, who runs her own cake-making business from home.

“We’d like four bedrooms, outbuildings and a bit more land.” The Shirazis are willing to spend up to £700,000 on their next property, although they have had to reduce their asking price from £465,000 to £425,000. Their home, West Efford Cottage, is for sale through Strutt & Parker (01392 215631; www. struttandparker.com).

“We’ve noticed that as we’ve had to drop our price, the houses we’re looking at are also dropping,” says Kate. “Yes, your house might be worth less than it was six months ago, but so is the house you want to buy.”

One of the main problems at the moment is chains. If you are caught in one and want to downsize, then, bizarre as it sounds, you could always buy a property further down the chain to get things moving.

Hamptons has been encouraging clients to do this: in Guildford, someone selling a £2.85m property bought a £1.35m home further down the chain, while in Liphook, Hampshire, an owner enabled his £600,000 sale to go through by buying a £350,000 property. “If sellers are prepared to be a bit more creative, they can get the sale they want,” says Mark Anderson, managing director of Hamptons.

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