Summer homes sale as prices tumble 1% in June

Homeowners have slashed almost £2,000 off the average asking prices of property on the market in the past month, according to figures published today.

The 1 per cent cut in prices over the four weeks is the biggest monthly fall since November, the property website Rightmove said. The figure was based on almost 125,000 homes, or almost half of properties on the market between 11 June and 9 July.

The steepest fall was in Wales, where asking prices fell more than 6 per cent after a runaway price boom over the past two years. Prices fell in the Midlands, West Country, Yorkshire, East Anglia and the North. Prices of houses in London bucked the trend, recording a rise of 1 per cent despite a fall of 0.1 per cent in the week of the 7 July terrorist attacks on the capital.

Rightmove said the annual rate of house-price inflation fell to a 10-year low of 0.2 per cent, from 2.4 per cent in May. Miles Shipside, its commercial director, said the figures werea sign that vendors had finally realised they had to lower their prices to attract buyers.

"Sellers are realising they have to compromise some degree of their gains to sell their properties," he said. "This ... is a vital step along the road to an orderly recovery of the property market, particularly if combined with an interest-rate cut."

The housing market has slowed dramatically since annual growth peaked at 20 per cent a year ago, as the five rises in interest rates since November 2003 have pushed up mortgage costs.

Rightmove said the slowdown was exacerbated by sellers refusing to negotiate on price. Mr Shipside said the trend made a sudden price crash less likely.