The Royal Institution of Chartered Surveyors claimed a shortage of houses in the UK was propping up a declining market but estate agents in Northampton have experienced a combination of declining sales and falling prices.

Simon Bond from Northampton estate agent, O'Riordan Bond, said: "What we're seeing is that prices are not necessarily going down, properties are coming onto the market with an inflated asking price.

"The demand for properties is beginning to reduce, interest rates have risen and the credit crunch is affecting the number of people who are able to borrow. Lenders are more cautious and, of course, there's always a seasonal downturn at this time of year.

"We have seen a slowing down in the number of transactions by about 20 to 25 per cent, and that is country-wide, but now properties are being priced correctly. Across Northampton as a whole, there are 30 per cent less properties being bought and sold.

"We're down about 20 per cent but in the new year, more people want to buy houses. One great thing about Northampton is that it has got a fantastic location, the population is growing and people are relocating to Northampton. There wouldn't be the opportunity to build so many houses if the demand wasn't there."

Prices across the country dropped in October for the third month in a row, with only London resisting the plummet.

Richard Greener, from Richard Greener Estate Agents in Northampton, said: "We're managing to get 90 to 95 per cent of the asking price, whereas we normally reach 97 or 98 per cent. Our volume of house sales hasn't changed but the prices have.

"There is a chronic shortage of houses in the South East. If you look at the level of immigration and the number of divorces and people living alone, all this is increasing demand on houses."

However, Towcester estate agent, Jackie Oliver, said South Northamptonshire was resisting the downturn.

She said: "The market is quite busy and, historically, Towcester is an area that bucks the trend."