A survey by property consultants Hometrack has found that the average cost of a residential property in England and Wales has fallen to £165,300, the biggest annual drop since Hometrack started its index back in 2001. Prices fell 1% from August.

It means that the average seller in England and Wales got just 90% of their asking price during September.

The figures were supported by research from the Royal Institution of Chartered Surveyors (RICS), which said sellers in some areas of the country were accepting discounts of 12.5% of their asking price.

Hometrack warned that transaction levels looked set to fall back to a level not seen since the 1960s.

The group also recorded a further fall in the number of new buyers registering with estate agents as confidence continued to be hit, with 5.3% less people starting the house hunting process in September compared with August.

There was also a 1.5% fall in the number of people putting their property on the market during the month, while properties in September typically took more than 11 weeks to sell- almost twice as long as last year.