House prices fall 2.2% in August

House prices experienced the biggest monthly fall so far this year in August as summer sellers cut asking prices to drive through transactions, according to property website Rightmove.

Its latest figures showed the average asking price fell 2.2% this month – equivalent to £5102 – compared with a 0.6% rise in July.

The fall came in spite of a scarcity of stock coming on line and increasing levels of optimism in the market. Rightmove said the drop was likely to be seasonal as those selling in summer months tend to be more “aggressive” with prices because they need to sell but know there is a smaller pool of buyers.

Miles Shipside, commercial director at Rightmove, said the figures reinforced the company’s view that prices will bump along the bottom before returning to consistent growth.

He said: "After several months of activity and prices revving upwards from last winter's low point, both will start to hit the limiter without more mortgage finance. In spite of pent-up demand, the market and pricing is boxed in by restrictive lending criteria put in place to ration mortgages given the lack of funds available to lenders."

However, market sentiment continued to improve this month. Rightmove said 75% of home owners did not expect prices to fall in the next year.

The number of new sellers in August was 48% below pre-recession levels, it added.