The cost of buying a new car has fallen 9% during the past five years, according to a new survey by Alliance & Leicester.

The average purchase price of a new car dropped by almost £1,400 between 1999 and 2004, the Alliance & Leicester Car Price Index has found.

Prices paid for second hand cars have come down even further, falling by just under 25% to an average of £6,881.

But the cost of car maintenance and repair moved the other way during the period, becoming 39% more expensive.

Alliance & Leicester says economic and social developments, which have seen increasing number of households own more than one car, have also influenced price trends.

The average price paid for a new car in June was just over £13,000 compared to £14,397 in June 1999.

The biggest price reductions came among "city car" models. Their average price fell 18% over the period.

At the other end of the scale, prices paid for superminis declined by only 2.5% and for luxury models by 5.4%.

In the second hand market, family cars saw the biggest reduction in price, dropping 34%. Prices paid for nearly-new cars, defined as models aged between one and three years, dropped 21.9%.

Alliance & Leicester head of personal loans Andy Bayes said that prices had fallen despite ever-increasing demand for new vehicles.

"The last five years have seen the car buying consumer's position strengthen," he said. "Not only have prices come down, but it has never been easier to compare them and to use that knowledge to drive a really good bargain."

The Alliance & Leicester sponsored Car Index is researched and produced by research consultancy the Centre for Economics and Business Research.

Source: bbc.co.uk