Yes, that is the uncomfortable reality of the property market right now.

House prices fell by 1.8% in August, bringing the average price of a property in the UK down below the government's new stamp duty threshold.

The UK's largest mortgage lender, Halifax, says that the average price of a property has fallen by 12.7% since last August; this is the biggest fall since it began publishing its monthly survey in the early 1980s.

Prices have dropped by more than £25,000 since August 2007 (when the average home would cost you £199,612), and by more than £3,000 since July.

The average house price now stands at £174,178.

This is below the new £175,000 stamp duty threshold, introduced by the government on Tuesday as a temporary measure designed to bring life to the the housing market.

The annual price fall quoted by Halifax is 10.9%; lower than the fall shown by comparing the average prices in August this year and the same month last year.

This is because the lender calculates the annual change on the basis of three months' figures, which it says gives a fairer representation of what is happening in the market.

Martin Ellis, Halifax's chief economist, said:

"The pressure on householders' income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels."

But he said the market continued to be supported by high employment levels, low interest rates and a shortage of new houses.

He added: "This week's announcement on stamp duty is a welcome development and will benefit a significant number of homebuyers, particularly outside the south-east."

Interest rate cut today?

Although an interest rate cut might encourage buyers into the market, the high level of inflation in the UK meant the Bank of England means its’ likely to hold rates when it makes its decision today.

There has been some good news for borrowers in recent weeks, however, as mortgage rates have started to edge down.

According to Moneyfacts, the average cost of a 2 year mortgage has returned to its pre-credit crunch level’; dropping to 6.39% from a peak of 7.08% in early July.

Abbey has also just announced it is cutting rates on its 2, 3 and 5 year fixed rate mortgages by up to 0.3%.

First time buyers have also been given a glimmer of hope, with Skipton building society announcing it would be renewing offering 95% mortgages from September 15.

However, the deal is only available to those of you who save with the society or who have family members who do.

So, how long do you think prices will keep dropping for?

What kind of level should the average house price drop to for it to be realistically affordable for most people?

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