House prices advertised via Rightmove's website, which covers about 90% of homes sold via estate agents, are 0.3% lower this month than in August 2010, at an average £231,543.
Compared to last month prices are 2.1% lower, in part reflecting a seasonal lull, the organisation said.
However, Rightmove added that average asking prices were just 4.1% lower than the peak before the start of the financial crisis in 2007.
The number of sellers is 30% lower, as low interest rates and relatively stable employment have meant few sellers have been compelled to cut prices to levels affordable to buyers, who have much less access to mortgage finance than before the crisis.
He explained that the impact of renewed financial turmoil in financial markets is likely to be limited because prices are already ‘bumping along the bottom’ with low transaction levels.
He also pointed out that base rates are now expected to be unchanged until at least 2013, limiting forced sales and holding down mortgage rates for deposit rich buyers.
But there are still risks that could pull the market down again such as increases in unemployment that could stretch lender forbearance to breaking point and sovereign debt concerns could hit willingness to lend and freeze credit markets again.
One sign of growing concern is that London home sellers lowered asking prices by the most in a year in August as demand in Britain’s most expensive real estate market was hit by turmoil in financial markets.
Asking prices in the capital dropped 3.4% from the previous month, when they decreased 1.4%. ‘Prices often fall back at this time of year, but the renewed turmoil in global financial markets may be starting to hit home with London buyers who have thus far been insulated from the worst of the downturn,’ Shipside added.
