House prices in Britain fall in July

Asking prices for homes in England and Wales fell two per cent year-on-year in July, a survey by property website Rightmove showed yesterday, the first annual fall since the series began six years ago.

Rightmove said property prices fell 1.8 per cent - or just over £4,000 - on the month to leave the average asking price at £235,219.

Prices had stood 0.1 per cent higher than a year ago in June.

The figures are not adjusted to take seasonal factors into account but add to overwhelming evidence of a sharpening housing market downturn as lenders tighten up mortgage terms and the economy slows in the wake of the credit crunch.

"The drop in transaction levels is the most alarming characteristic of the current market and has the most widespread impact," said Miles Shipside, commercial director at Rightmove.

"As well as job losses in both the residential and commercial property industry, there is a massive knock-on effect to other areas of the economy as consumers spend less."

Rightmove said the number of new sellers entering the market had fallen by about a fifth on the same period a year ago while estate agents are reporting a series-high average of unsold properties on their books.

"Any meaningful increase in sales volumes will require a U-turn in current lending policies by banks and building societies," Mr Shipside said.