What goes up must come down.

And that is exactly what happened once the cost of property peaked last August.

The drop coincided with Northern Rock's near demise and problems in the US credit markets.

So far this year the average price of a three-bedroom, semi-detached house in this area has dropped from £240,000 to £230,000.

But after the government stopped the tax on properties costing less than £175,000 this month, sales are up.

Terry Davidson, of Leamington estate agent Loveitts, said: "September has been our busiest month of the year since January.

"The government's decision has instilled confidence in buyers. House prices are certainly lower than before - a house that was worth £185,000 last year now costs £165,000.

"We are having to be realistic and the public are too. Gone are the days of trying to get an extra £10,000 or £15,000 for a property.

"Buyers are clever and use the internet to look at prices - they know what a house should be worth."

Harvey Williams of the Royal Institution of Chartered Surveyors believes the fall in house prices is slowing and is hopeful "equilibrium" can be achieved.

He said: "There was a great uncertainty over stamp duty, which meant deals in August were put on hold.

"But there have been more deals this month than in the previous three and that's reflected by mortgages being available at lower interest rates. A peripheral factor is the base threshold where stamp duty applies.

"But you can't buy many homes in Leamington, Warwick or Kenilworth for £175,000 or under."

Mr Williams thinks the next 12 months will be a "testing" period.

He believes the market will improve if the US and UK governments can free up the "log jam" created by a cash shortage for mortgage funds.

GOOD TIME TO BUY FOR FIRST-TIMERS

Good deals are around for first-time buyers, says Julie Philpot of Brian Holt estate agents in Kenilworth.

She said: "This week saw another lender reducing mortgage rates – although these mortgages do require a 15 per cent deposit.

"This means buyers able to obtain mortgages are in a good position to take advantage of deals.

"Sellers who are realistic about asking prices are able to sell their homes, but they do need to appreciate that they will need to accept lower offers than they would have expected a year ago.

"This in turn means, if they are moving upmarket, that they can take advantage of houses whose vendors are equally open to accepting a lower price. The differential is key in these cases. The watchword is realism."