Winner takes all

House prices fell 1.2 per cent in July, the 10th fall month-on-month, according to the latest Hometrack survey — and 4.4 per cent over the year.

Though falling house prices can put people who bought recently with 100 per cent mortgages into negative equity, a falling market has big plus points.

For first-time buyers, house prices are lower than a year ago and for those with a big enough deposit this is very good news. There are also shared ownership incentives available to first-time buyers, which help even more. For London-wide schemes, visit www.housingoptions.co.uk.

Other winners in a falling market can be those trading up to a bigger house. This is how it works: if the reported 4.4 per cent falls are reflected in the house you own and the house you plan to buy this month, you will actually end up better off than if you had moved up to the same property this time last year.

If last year you lived in a family house worth £600,000 and had moved to a bigger house worth £900,000, you would have had to find £300,000 extra. But if prices this year are 4.4 per cent lower in both cases, your original house will now be worth only £573,600. But the house you want to buy will now be worth just £860,400 — so you need to find only an extra £286,800 to buy it — saving yourself £13,200.

If prices fell 20 per cent — which some are predicting — the same transaction would cost £60,000 less.

Of course, houses and house prices rarely follow averages — for there to be an average drop in prices across the board, some properties will have fallen less, but some more. Those who would benefit most would be trading up from a high-value area, for example central London, where property prices have held, to a place where prices have fallen faster — perhaps a country village.

No matter where you are moving you will always get a better deal if you are ready to move, with your finances in place, when the right deal comes up.