House asking prices have fallen for the first time this year as the number of unsold properties on estate agents' books reaches record levels, a report revealed today.
The average asking price for a home dropped 1.6%, or £3,797, to £236,597 in July, bringing to an end a run of six months of rises, according to property website Rightmove.
Greater competition to attract buyers amid "muted demand" has prompted the largest July fall since 2008 when asking prices fell 1.8%.
Seven in 10 properties put on the market so far this year have yet to find a buyer. This has helped push the average number of homes registered with estate agents up to 78 - the highest ever for the time of year.
So many sellers are struggling to sell their homes partly because mortgage approvals are running at about half the rate they were before the financial crisis, while some buyers are staying away, fearing that prices have further to drop.
Miles Shipside, director of Rightmove, said: "Summer sellers are more nervous about their selling prospects than the early birds who asked ever higher prices during the first six months of this year."
But he warned that many home owners may not have sufficient equity in their homes to drop their prices any further and may be "trapped" in their current properties.
Asking prices are still 0.1% higher than a year ago but are now 14% lower than they would be if they had risen over the past four years at the same rate as inflation as measured by the retail prices index (RPI).
Mr Shipside added: "While property has a good long-term record as a hedge against inflation, in the short term property prices have become significantly cheaper in real terms as the cost of living has gone up, while the cost of housing has stood still or gone backwards."Reuse content