The number of homes going on sale in England and Wales plunged from more than 4,500 a day in 2006 to barely 2,300 in 2009, according to a new analysis.

Market commentator Henry Pryor at HousingExpert said: "Today, there are about 25 per cent fewer estate agents handling about 3,154 new instructions per day, down from 6,792 per day in 2005."

Around 81,000 homes each month go on sale, barely half the long-term average of 167,000 and so there is no early end in sight to the shortage of homes for sale.

"This shortage of instructions will lead to fees being cut by some agents which is good news for consumers but also over-optimistic valuations by agents keen to impress nervous potential sellers," said Mr Pryor.

He added that agents’ readiness to say homes will fetch a higher price than the market will deliver may have increased the gulf between asking price and average price actually achieved.

In September 2005, this gap was £28,000. By June 2009, it had soared to a "staggering" £70,000.

The survey confirms that the shrinkage of the market may have pushed prices up in 2009, against expectations: the number of homes for sale (around 700,000) remains 35 per cent below the long-term average of just over one million.

But only 70,000 homes actually sell each month, so 700,000 vendors have only a one in 10 chance of actually finding a buyer in any one month. That is why many have been on the market for months, even years.

Whether a shortage can sustain prices is doubtful, said Mr Pryor. He fears prices could drop 10 per cent in 2010.