Henry Pryor Says: What's really happening to the housing market

Search: More on latest house price figures

According to the Land Registry who record the sale of each and every property in England and Wales, in the first six months of the year there were 902 homes sold in Battersea in leafy south west London.

This compares with 1130 in the same period in 2006, 785 in 2005 and 1076 in 2004.

"So what" I hear you ask. Well, as it happens, SW11 is pretty typical of the whole country in terms of trends.

There are about 15% fewer homes for sale in the first half of the year than there were last year. But what has happened in the second half of the year, in August and September?

I've just been reading the latest press release from the Royal Institute of Chartered Surveyors which says that on top of a 51% drop in the number of big houses for sale in August last month there was a fall of 37%.

This would mean that there has been a HUGE change since 1st August - which happens to coincide with the introduction of Home Information Packs although I'm not convinced that the two are connected.

The RICS monthly survey is eagerly awaited by many journalists. Rightmove, the biggest property portal agreed that there was a significant drop in the number of properties coming to the market in August - down about 41% they thought on the average monthly number for the first half of the year.

They will tell us about September figures next week but it looks like something really big is happening.

The value of your house is governed by the price of the small number of houses that are sold. These prices are partly influenced by supply and demand.

If there are 40% fewer houses to buy, and by extension around 40% fewer buyers, then prices become much more difficult to gauge across the whole market.

In addition, we are told to expect about 70,000 repossessions in the next 12 months many of which will be sold via auction at depressingly low prices. This could represent about 10% of all sales.

The bottom line then is that the value of your house is going to be harder to calculate and almost certainly going to be less than you might have wanted.

The flip side is that if you want to buy then it is much easier to negotiate the price down. So when you find the home of your dreams, don't be afraid to negotiate.

The great property dealer 'Black' Jack Delall once told me that it's not how much you sell something for, it's what you pay for it that determines how much you make on a property.

It's still possible to make a good buy in a falling market - you just need to be more careful and not be afraid to walk away from a deal that doesn't feel 100% right.

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