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The Chesterton House Price Poll of Polls for August, compiled by the Centre for Economics and Business Research (CEBR), revealed house prices fell in all regions and across all property types in August.

The average price of a residential property in England and Wales fell to £188,431 in August, down 1.1 per cent from July. Meanwhile, a year ago the average house price was £195,192.

Terraced houses suffered the biggest decrease, experiencing a 0.7 per cent drop in month-on-month prices. Meanwhile, the average house price in London was 0.9 per cent lower than in August 2007.

Douglas McWilliams, chief executive of CEBR, said: "The credit crunch is now having a profound effect on the housing market, causing the August house price Poll of Polls to show the largest year-on-year fall since the survey began.

"While the Treasury’s announcement of a break in stamp duty may provide a small fillip to properties outside of London and the South East in the short-term, until banks start lending again, house prices are likely to continue their downward descent.

"The latest Bank of England data shows only 33,000 mortgage approvals went through in August, which is 71 per cent lower than the number of loans approved in August 2007."

However, Robert Bartlett, CEO of Chesterton, said they were beginning to see evidence of fresh interest in the market.

"Committed sellers remain scarce but the number of prospective buyers who are now sensing the ability to obtain real value seems to be growing in London."

Bartlett added: "Sellers should take heart and remember that what they may lose on a sale, they will be gaining on their purchase in this market."