Justine Allit said that the fall in house prices follows a "classic inflationary bubble induced by cheap borrowing".

Prices soared because of the lowest interest rates in a generation made houses, however expensive on paper, cheap to buy. Millions borrowed and bought and prices soared.

He said: "The bubble duly burst and house sales in Britain are down on a year ago by some 35 per cent and prices in my opinion are down almost 10 per cent.

"The market has delivered in a matter of months what the Monetary Policy Committee Member, Kate Barker, claimed that only flooding the market with "new land" could achieve, a surplus of housing supply for both sale and rent, signified by a fall in price.

"House-buying has been brought within the range of millions of new buyers, albeit under a more disciplined mortgage regime.

"This would be good news if it were not for the consequent crash in banking confidence. The banking system, inflated by the desire for British homeowning and bad American loans, has experienced a trauma. But once lending confidence comes back sure enough house prices will start to increase again.

"Now is the time to buy and to take advantage of the cheaper housing stock before price increases return, probably in 2009.

"The key is to secure the finance but there are still lenders offering good deals," said Mr Allitt.

For any information on mortgages call Allitt Estate Agency on (01253) 752700.