Property prices fall 1.7% in August

UK asking prices have fallen 1.7% this month as sellers outnumber buyers and the seasonal lull combined to take the heat out of the property market.

This is the biggest fall in asking prices this year and follows the drop of 0.6% in July, according to Rightmove.

Miles Shipside, director of Rightmove, says: "No-one really wants to come to market in August unless they have to. It shows these new sellers have a compelling need to sell, as they have lopped over £4,000 off the average asking price."

Keen sellers are negotiating to beat the competition, added to the fact August and December traditionally see price falls, says Shipside.

"Following gains of 7.0% from January to June, prices have now fallen back by 2.3% in the last two months. We predict that the gains made so far this year will have dissipated by year end," he says.

He wouldn't discount further price rises in September and October when buyers return to the market, but said the year could perform similarly to 2008, when prices fell by 7.8% in the second half.

Shipside adds: "There needs to be a spur to cause prices to rise. However, as mortgages won't become available to the masses and last year's stock shortages show no sign of re-appearing, we can't see it happening during the remainder of 2010."

In this market, the only options left to sellers are to spruce up the property or cut prices, says Shipside.

Meanwhile, mortgage approvals are up by 13.8% on the previous month, but down 3.6% on the same period in 2009.

Rightmove's last quarterly Consumer Confidence Survey, showed six out of ten renters would like to buy but can't afford it.

The number of distressed sellers is likely to increase in the coming months putting property prices within reach of new buyers, but small deposits will bar many from their first homes.