The average price of property coming to market fell by £905 (0.2%) this month, the latest housing price index from Rightmove reveals.

However, average asking prices are still 2.6% higher than in January.

Rightmove says that while buyer demand remains resilient – 3% higher than July 2019 – the choice of available properties for sale is 12% lower than it was four years ago.

This, it adds, is proof that Bank of England rate rises are starting to ‘bite’.

Despite this, agents are reporting that right-priced homes are still attracting motivated buyers due to the shortage of property for sale, according to Rightmove.

Rightmove’s director of property science Tim Bannister says: “The interest-rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market.

“While prices and sales bounced back this year much more strongly than most expected, the unexpectedly stubborn inflation figures and the surprise of further mortgage rate rises when many felt that they had stabilised, have contributed to the fall in prices and number of sales agreed.

“First-time buyers, trader-uppers and downsizers with higher deposits and lower mortgage requirements appear to be still keenly searching the market, not wanting to miss out on the right property that is not over-priced and that they can still afford.”

The two larger home sectors have been most impacted by lower levels of agreed sales, according to the index.

Rightmove says the numbers of sales agreed in June in the mid-market second-stepper sector and the top-of-the-ladder sector are 14% behind 2019’s level.

The smaller home, two-bedrooms and fewer market sector has been less impacted, with June’s sales agreed figure 9% below 2019’s level, it adds,

This typical first-time buyer sector has held up most strongly throughout the first half of the year.

Rightmove says this highlights an ‘ongoing determination from many first-time buyers to navigate the unsettled mortgage market and get onto the ladder’.

Bannister adds: “Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans.

“However, there remains a large volume of motivated buyers who can factor rate rises into their budgets and are continuing to enquire about homes for sale, which is keeping the market functioning.”

Property lender MT Finance’s director Tomer Aboody says: “With continued rate rises negatively impacting affordability, many would-be buyers are no longer even able to consider purchasing and the market is slowing accordingly.

“Sellers not selling due to fear of being knocked down on their expected price and fewer buyers around due to confidence and lack of affordability, is contributing to falling transaction levels and pricing.”

Meanwhile, North London estate agent and former RICS residential chairman, Jeremy Leaf, says the figures ‘bear out what we’ve been seeing in our offices’.

‘There are still plenty of especially cash or equity-rich buyers but they’re taking their time to view a slowly increasing choice of properties.”

He says that following their own stress testing they are then making ‘what are often cheeky offers’.

“On the other hand, most sellers seem in no rush to accept significant discounts, at least for the time being,” he adds.