The rate at which asking prices for property are rising stalled in June as new sellers flooded on to the market, research showed today.
The average cost of a property in England and Wales rose by just 0.3% during the five weeks to June 12, following a 0.7% jump in asking prices during the previous month, according to property website Rightmove.
The group said although June marked the sixth consecutive month during which asking prices rose, the rise was a far cry from the 2.6% gain seen during April.
The slowdown coincided with a 22% jump in the number of people putting their home up for sale, following the abolition of controversial home information packs (HIPs).
The group said the housing market was now beginning to turn due to increased competition among sellers and a slowdown in the number of potential buyers.
The situation was exacerbated by expectations that capital gains tax (CGT) will be increased to be in line with income tax rates in next week's Budget, which is thought to have made investors more cautious about expanding their portfolios.
Miles Shipside, commercial director of Rightmove, said: "The continuing mortgage famine has now been joined by a surge in sellers following the abolition of HIPs and investor reticence driven by rumours of CGT increases.
"Together, these factors are likely to put an end to this year's recovery in house prices.
"It is an unfortunate concatenation of events that disrupts what was sort of passing as normal service, where investor appetite provided an uneasy balance to the first time buyer-starved market."
The group said asking prices rose by 7.4% since the beginning of the year, while they are 5% higher than they were in June 2009.
But it expected them to fall during the coming six months to end 2010 at broadly the same level they started it.
There are now 56% more homes on the market than in June 2009, with London seeing an 88% jump, but the shortage of properties for sale was seen as one of the key factors supporting the house price recovery during 2009.
The average number of unsold properties estate agents have on their books rose for the fourth month in a row during June to 74, up from 71 in May, with stock levels now at their highest since October 2008.
Greater London saw the biggest price change of 2.2% during the month, followed by the North West at 1.5%.
But at the other end of the scale prices fell by 3.3% in the West Midlands and dropped by 1.6% in Yorkshire and Humberside.