Average asking prices fell by 2% over the past month, the largest August drop in prices for eight years, the latest index from Rightmove shows.

The £7,360 month-on-month fall was the largest August decline since 2018 and took the average asking price of a newly-listed home to £364,999.

Prices are now 1% lower than a year ago, which is the biggest annual fall since December 2023.

Rightmove says sellers are lowering their expectations in response to the traditionally quieter summer period and a 12-year high in the number of homes available for sale at this time of year.

However, the national figure masks a growing regional divide.

Asking prices in the north of England are 1.5% higher than a year ago, compared with a 1.8% fall across the south.

The North West recorded the strongest annual growth at 1.9%, while London saw the largest decline in Great Britain at 3.1%.

The number of homes available for sale in the capital is at its highest level for 16 years, increasing competition among sellers.

Rightmove says affordability is also weighing on the London market, alongside higher stamp duty costs and challenges affecting parts of the flats market.

Buyer demand has risen by 5% since Andy Burnham became Prime Minister on July 20.

But overall buying activity remains around 10% below last year’s level.

Meanwhile, the average two-year fixed mortgage rate has risen from 4.92% last month to 5.09%, although Rightmove says there may be scope for rates to fall in the coming weeks.

Rightmove has downgraded its forecast for average new seller asking prices in 2026 from 2% growth to between 0% and a 2% fall, citing geopolitical uncertainty, the changing mortgage rate environment and the new Chancellor’s first Budget in October.

Rightmove property expert Colleen Babcock says: “This month’s larger-than-usual August price drop is a sign that many sellers are recognising the reality of the market and pricing much more competitively from day one.

“Buyers have the widest choice of homes for sale at this time of year in more than a decade, so standing out on price for the right reasons is hugely important.

“National average prices are increasingly masking very different local market conditions. While asking prices across both northern England and Scotland continue to edge upwards, southern England is moving in the opposite direction, with London seeing the biggest annual price fall.

“The mini Burnham bounce and some renewed general optimism have brought a degree of improvement to the market as a whole in recent weeks.

“Whether that develops into a more sustained recovery will likely depend on confidence, mortgage rates and the new Chancellor’s first Budget this Autumn.”

Benham and Reeves director Marc von Grundherr says: “There’s no denying that London is having a more challenging year than many other parts of the country and affordability is at the heart of it.

“However, I wouldn’t characterise the London market as being in any sort of serious decline.

“What we’re seeing is a much more price-sensitive market and sellers who acknowledge that are still finding buyers.

“The difficulty arises where asking-price expectations remain anchored to a market that no longer exists, and that is particularly evident within parts of the flat market where buyers are also scrutinising service charges, lease terms and the wider cost of ownership far more closely than they perhaps did previously.”