Car buyers looking for a second hand bargain are in for a treat as the value of nearly new cars has fallen by nearly 12% and that of used cars by over 13% in the last year said a survey today.

Alliance & Leicester, which compiles an index of car prices in association with What Car? magazine, said that the value of nearly new cars dropped by 11.4% in the year to June as car buyers are increasingly opting to buy a new model rather than a used one. It said that as a result the second hand car market was "overladen with bargains" at the moment.

Nearly new "compact executive" cars such as the Alfa Romeo saw the greatest drop in prices with a reduction of £3,100 over the year to June bringing the price down from an average £10,000 to £6,900. Small cars, such as the Vauxhall Astra and superminis like the Peugeot 206 saw price reductions of between £750 and £1,000 over the year.

Family cars were the biggest fallers, said the survey, with nearly new cars down 13% and used cars down 21.9% over the year.

New car prices had also fallen by an average 1.2% over the year although not all new car prices had fallen, with increases of around £200 for city cars such as the Ford Ka. But prices had come down in nearly all other categories such as 4x4 off-roaders, which saw the average Land Rover Discovery fall in price by just over £1,000 in the year to June.

"While new cars are the cheapest they have been for years, those looking for real deals should look to the second hand market, which represents great value for money at the moment," said Andy Bayes, head of motor finance at Alliance & Leicester.

"Those prepared to haggle can get a great bargain as dealers desperately try to move the huge volumes of cars found on the forecourt."

The large number of cars on the second hand market follows two consecutive years of record new cars sales, said the survey. It added that tax pressure on fuel efficiency and emissions, on company cars in particular, had pushed them on to the second hand market in large numbers.