A comprehensive end of year survey by the leading property firm Strutt & Parker shows that average house prices declined only slightly at the end of 2004, and several parts of the country were unaffected.

Unsurprisingly the biggest changes were in the South and South-East, with Berkshire seeing a fall of 9%. The West Country and Suffolk were also affected, with both figures being around 6%. In most other areas south of the Midlands the fall was around 3 to 5%.

Contradicting that trend though, prices in Essex rose by an average of 3%. However, it wasn't the same picture right across the market in the county. Larger properties, for example period country houses with typically between 15 and 20 acres of land – and costing up to £2,000,000 – showed an increase of 6% with the lower end of the market – three bedroom cottages, typically, and costing on average £475,000 – seeing a 3% increase, in both cases, principally due to a shortage of supply. The middle of the market, five bedroom family homes costing £1,000,000, remained static

The other exceptions were all further north, with Strutt & Parker's offices in Chester, Moreton-in-Marsh, Morpeth and Harrogate all showing that values have remained level. Scotland continues to be strong, bucking the national trend; the firm's Edinburgh office reported the country's highest rise of 3%.

Jeremy Smallman of Strutt & Parker says, ‘The static middle market may be accounted for by City buyers waiting to see how their bonuses will look in January. That is a big factor in Essex, but the signs are that in 2005 bonuses are going to be better than last year.

‘There was a slow-down in late autumn, but prices held up very well; more than 70% of the properties we sold towards the end of the year went for or above the asking price.'

The Survey, which is conducted quarterly across Strutt & Parker's 22 residential offices in England and Scotland showed several other key elements of the current property market:

• The most important factor in the existing conditions is pricing. Properties initially overpriced will stick, but well-presented, realistically-priced homes are selling.

• Buyers remain cautious. They are taking longer to make up their mind which house to buy

• Several offices reported that although activity dropped away in late summer and early autumn, the end of the year was busier than expected. The interest rate rises had an effect, but people see employment remaining high and commercial confidence buoyant, and interest rates at current levels remain affordable

• The market has only stalled, and will become active again in January. Life goes on – home-owners move jobs and have to relocate, families need more space, older generations want to downsize or move to a different part of the country – and they're not easily going to be put off achieving those ambitions.

It is widely thought that there will be a General Election in May 2005, and as a direct result interest rate levels are unlikely to change significantly. An in-coming administration is not going to ruin its honeymoon with the electorate by allowing rates to rise in a hurry. In the past governments have often cut interest rates in a run up to an election, but there is little scope to do so now.

All the major parties have discussed alterations to the different property taxes, but as none has published their manifestoes yet it is impossible to know if those thoughts will become commitments.

Summing up the report, Jeremy Smallman, who is based at Strutt & Parker's Chelmsford office says, ‘Overall the property market locally is in good shape. We expect the early months of 2005 to be busy, though it's going to be a challenging time for estate agents – in more difficult trading conditions, properties are sold by the most experienced and diligent agents'