Average asking prices fell by 1.9% in August, Rightmove’s latest housing price index (HPI) shows.

House prices dropped by £7,012 to £364,895, the sharpest August fall since 2018, and above the average decline of 0.9% in the traditional summer slowdown.

Rightmove says lower asking prices, combined with the recent trend of lenders cutting rates, are ‘tentative steps’ towards improved buyer affordability.

However, average prices are still £59,000 (19%) higher than in the pre-pandemic market of August 2019.

The number of sales being agreed is now 15% lower than 2019, with higher interest rates causing people to ‘pause their moving plans for now’.

Meanwhile, the first-time buyer sector is still down by 10% compared to four years ago.

In the typical first-time buyer sector of two-bedroom and fewer properties, average advertised rents are up by 12% compared to last year and by 33% compared with the same time in 2019.

Rightmove’s director of property science, Tim Bannister, says: “There are still significant challenges in saving up enough for a deposit and affording higher mortgage payments, however, would-be buyers are now likely to see greater property choice in their area and therefore a home more likely to suit their needs compared to during the pandemic.

“But while there is more choice there is no glut of properties for sale, with the number of available properties still lower than this time in 2019 and home still selling more quickly, with the average time to find a buyer now 55 days compared to 61 days in 2019.

“While a 1.9% drop in just one month seems dramatic, it’s in part an expected seasonal drop as sellers coming to market realise that they have to compromise on price due to the traditionally quieter summer holiday period.

“Agents report that correctly priced homes in many areas are still attracting multiple prospective buyers competing to secure them, so if buyers see a home that could be for them and they can afford it, they may still need to act fast rather than sitting back.”

North London estate agent and a former RICS residential chairman Jeremy Leaf says: “Despite a larger-than-expected drop in aspirational asking prices as opposed to selling prices, in many cases this hasn’t generated an increase in sales agreed, which remain disappointingly low.

“On the ground, we’re seeing a similar picture. Realistically priced properties are still selling relatively quickly particularly to ‘cash’ or equity-rich buyers whereas those requiring reductions to attract more attention are sticking.

“Certainly, continuing strong employment and slightly more stable mortgage rates are helping to revive interest despite holiday distractions.”

MT Finance director of property lender Tomer Aboody says: “As affordability continues to be a huge strain on buyers, the lack of stock on the market is proving another stumbling block for would-be property purchasers.

“Although stock levels have improved slightly on last year, they are still below pre-pandemic levels, resulting in competition for the best properties at the correct price.

“Hopefully, some market stability establishes itself soon, which in turn should bring some confidence and further stock to tempt buyers.”

Shawbrook’s managing director of real estate Emma Cox, says: “Conflicting data from what we saw last week from the ONS, which is unsurprising given the wider inflationary and interest rate pressures.

“Seasoned property investors will be keeping a close eye on possible opportunities, particularly given the situation where demand is outpacing supply within the rental market.

“As a multitude of ‘accidental’ landlords make their exit, astute investors stand to capitalise as opportunities open for channelling investments into high-quality rental assets.”