House prices record first fall this year

House asking prices have fallen for the first time this year as the number of unsold properties on estate agents’ books reaches record levels.

The average asking price for a home dropped 1.6 per cent, 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 per cent.

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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 many homeowners 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 per cent higher than a year ago but are now 14 per cent 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).