Click here to see when the past will catch up with your house price

One moment, Detective Inspector Sam Tyler, a modern-day cop played by John Simm, is cruising down the road. The next, he crashes and wakes up to find himself transported to 1970s Manchester. Welcome to Life on Mars.

Homeowners could be excused for experiencing a similar feeling of disorientation. After years in which the value of their property has been rising month by month, they, too, are turning back the clock.

True, we are a long way from the days of Ted Heath and the three-day week, when the average semi cost just £10,875 and petrol was 79p per gallon, but house prices are falling – and are expected to continue doing so for some time to come. A recent survey estimated that one in eight people, about 145,000, who took out a mortgage since the beginning of last year are in negative equity: that is, their debt is more than the current value of their home.

So, have you already joined them – and, if not, will you do so soon? In other words, is the house you bought, say, one, two or three years ago still worth more than you paid for it? And can you expect to make any money on it if you need to sell within the next 12 months?

Exclusive research by Savills for The Sunday Times shows that average prices in England and Wales have slipped back to the same levels as in the first quarter of 2007. Assuming an annual fall of 10%, the agency believes they will probably end this year at about mid2006 prices.

House prices in the southeast outside London will hold up slightly better, it predicts, falling only to levels last seen at the end of 2006. Small comfort for anyone who owns one – the average property in the region is set to lose £2,100 in value per month over the course of this year.

Looking further ahead, and plugging in Savills’ predictions of a 15% fall in prices next year, things begin to look decidedly more negative. Lucian Cook, the agency’s director of residential research, says this would mean average prices by the end of the year would be down to levels last seen in early 2004 before they bottom out and gradually begin to rise again.

Such has been the strength of the bull market of the past decade, however, this would still leave average prices about 88% higher than they were at the beginning of 2000 – or 5½ times average earnings across England, back in line with the historic average.

“As the prospects for future economic growth have weakened since the start of the year, so predictions have become gloomier,” Cook says. “Certain markets will be hit harder than the average: prices of new-build property, particularly flats, are likely to suffer more than well-located family homes. This will be compounded by the fact that, in certain areas, the new-homes sector did not see the same levels of growth in the period preceding the downturn, which means their values will shift further back in time. Both purchasers and vendors need to have a realistic view of where the market sits in a historical context.”

Take Harpford House, a five-bedroom country property in Langford Budville, Somerset, which the current owner bought for £1m in 2006. When it went on sale last July, it was priced by the agents, Jackson-Stops & Staff (01823 325144, www.jackson-stops.co.uk), at £1.3m. In October, it was cut to £1.25m and now, after six months and 30 viewings, it is on the market for £1.1m.

For some homeowners, the downturn is proving sharper. Last week, John Young, residential director of Humberts estate agency, based in Blandford, Dorset, had to break the news to one of his clients that his property, a detached rural house built last century, is now worth less than it was when he moved in four years ago.

“He bought it in June 2004 for £415,000,” Young says. “Should he sell now, it is our advice to put it on the market at £395,000.” What is the owner going to do? “He is wrestling with the idea,” Young says. “He wants to move, but is loath to sell for less than he bought it for. People just don’t want to be seen to lose money on property. ”

Overall, country houses have seen price falls of 3.9% in the second quarter of this year, according to Knight Frank. “It is the biggest drop since we started collecting data in 1995,” says Liam Bailey, the agency’s head of residential research. “Three consecutive price falls mean the annual growth is negative, at -2.8%.” The agency is selling Northacre, a 19th-century house with outbuildings and a pool near the village of Northaw, in Hertfordshire, which went onto the market for £3.8m about a year ago, at the reduced price of £3m.

Properties in the more desirable parts of the capital, which seemed to weather the early part of the downturn, are also taking a battering. An example is 16 Rose-neath Road, a family house in Battersea, southwest London. It went on sale with Douglas & Gordon (020 7924 2000, www. douglasandgordon.com) in early March for £1,075,000. Last month, the price was cut to £995,000, and it has now been marked down to £925,000: a reduction of £150,000 in five months.

All this makes depressing reading for those who put off selling this spring in the hope things would pick up by autumn. It is good news, though, for potential buyers – at least, those who have access to finance. “Purchasers will be divided between those who are prepared to trade now and take a medium-term view on values, and those who hang out for the bottom, but run the risk of buying into a lower-supply market in 2009 or 2010,” Cook concludes.

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