Commenting on their latest monthly housing survey from over 5,100 agents and surveyors, Richard Donnell Director of Research at Hometrack said: “Average house prices in England & Wales fell by -0.4% in September and for the first time since April 2009, price falls were registered across all regions. This is the third consecutive month of house price falls and is part of an ongoing re-pricing process which began 6 months ago in early spring, and which is set to stretch well into 2011.

“The market is now entering the second phase of a re-pricing process as a response to falls in both sales volumes and demand. Over the rest of the year and into early 2011, agents will start to focus on re-pricing the property on their books to a level where transactions volumes are maintained. Talk of a double dip, with the implication being that the market will see double digit house price falls, is over-done despite the weak outlook for demand. We expect a slowdown in the volume of homes coming to the market to limit the scale of absolute price falls over the next 12 months. Over the last 6 months the supply of homes for sale has grown by 16% while demand has fallen by 1.6%.

“The latest survey highlights a 2.9% decline in demand - the largest monthly fall since January 2009. Growing concerns over the economic outlook and public spending cuts are weighing heavily on would-be purchasers. The decline in demand has accelerated over the last 3 months compared to the previous quarter. Anecdotally agents report that there are fewer purchasers and that those purchasers looking to buy are both cautious and choosy – the return to a buyer’s market seems inevitable in the coming months although the majority of vendors do not have to sell.”

The Hometrack data shows that the widening gap between supply and demand has resulted in the average time on the market rose to 9.3 weeks - the highest level for over a year. The proportion of the asking price being achieved has dropped to 93.2% from a recent high of 94.3% in June 2010.