Many of the city's estate agents say they are seeing a general downturn, although not as severe as that which is being reported nationally, and say prices are now about 25 per cent lower than they were a few months ago.

This month alone saw more than five repossessions for one estate agent, with many others looking to sell at significantly reduced prices to avoid the same fate.

Branch manger for Haart estate agents in Cowgate, Peterborough, Nikki Schreiber said: "We are still selling, but prices have definitely dropped by about 25 per cent, but that's over the last seven or eight months.

"It's definitely a buyer's market, and we are seeing more first-time buyers coming forward. We have even set up a deal with vendors who are prepared to drop their prices. For first time buyers some vendors have agreed to pay five per cent of their deposit to sell their property.

"Saying that, I don't think it is that bad. I saw a market much worse than this in the early '90s with many people in negative equity."

Director for PropertyLine in Lincoln Road, Peterborough, Simon Trigg agreed and told The Evening Telegraph things were getting tougher for the city's estate agents.

He said: "We have purchasers and vendors, the problem is mortgages. We are still selling, but people are making more of an offer to compensate for the rates lenders are giving out at the moment.

"Saying that, most areas in Peterborough are still selling if the price is right. If vendors are prepared to move on price they usually sell – it's the only thing that's really motivating buyers at the moment."

The drop in prices has certainly encouraged more first-timers to make an offer, but only those that have at least five per cent of the asking price saved for a deposit are likely to get a mortgage.

Lenders are no longer prepared to take on the risky customer, such as those with poor credit history and 100 per cent mortgages are now very rare.

Norwich and Peterborough product manager for mortgages Richard Barker said: "It's market confidence that's caused this problem, as the confidence in financial institutions has been lost.

"This is causing a reluctance to lend to one another. It will take time to pick up again, but, hopefully, it will towards the end of the year. I think there will be a further decline in house prices, maybe another 10 per cent, but nothing like we saw in the early '90s."

However, City and County sales manager Paul Saunders says the property market is as good as ever, and it's the media and the lenders who are causing the problem.

He said: "Our phones are constantly ringing. I don't believe house prices have dropped 25 per cent and any that have were probably priced too high to begin with.

"I don't think there are massive repossessions because most people have got collateral tied up in their homes now – it's nothing like the crash in the early '90s and I don't think there's a problem – it's the lenders who have the problem."