There is further evidence that the housing market is grinding to a standstill in the latest monthly figures provided by Hometrack.

Hometrack figures put the annual drop in average prices at about 6.2%. This is a more modest drop than the figures produced by Nationwide and Halifax, but as I have mentioned before I challenge anyone to come up with a meaningful “average” house price at the moment.

Leaving the scale of the drop in prices to one side, it is the detail in the research findings that leads to some worrying conclusions.

Hometrack’s head of research Richard Donnell sees transactions as the greatest casualty of the credit crunch. This has a grave impact on both the workings of the housing market and the overall economy.

In his forthcoming paper in the annual Housing Market Intelligence report he reckons that transactions will most likely stay below 1 million for the next few years. This is two thirds below the recent average.

Commenting on Hometrack’s September survey results, Richard concludes: “While the demand side of the equation remains weak it also seems that the general malaise is starting to impact on vendors with a further fall in the number of homes for sale as people withdraw their homes from the market in the face of greater uncertainty. With declining levels of activity on both the demand and supply side of the market 2008 looks like being a year when the housing market ground to a near standstill.”

But there are other issues that emerge from the data. Those sellers who have to sell are taking ever deeper discounts from the asking price. Hometrack puts the average “discount” at 10% in September. It stood at 9.1% in July.

Now this may be a result of them overcooking the asking price in the first place, but this explanation would seem to be out of step with the data coming in from Rightmove on asking prices. That shows accelerating drops in the prices being posted in estate agents windows.

The big scary question buzzing around now is what impact a recession and unemployment might have. While unemployment was not the trigger for the collapse as we have discussed before, it did give the market a good kicking when it was on the way down.

After staggering for a year or so, house prices took a dive as unemployment rose. One likely mechanism for that sharp drop would have been the increasing level of forced sales. Before then, similar to where we are now, most potential sellers could simply not bother to sell and take their homes off the market if they failed to realise a desirable price.

So, the next few months will be interesting to observe – will history repeat itself? Certainly not precisely, but the question is how closely. If there is a similar repeat we could be looking at a very grim start to the selling season next spring.