£13,000 off house prices in 5 weeks

Fears about the prospect of a housing market crash, the effect of five interest rate rises imposed since November and the fact that sky-high prices have deterred many first-time buyers have contributed to a highly jittery market.

And with homebuyers deeply anxious about taking the plunge, sellers have had to scale down asking prices to tempt them.

The trend is being seen in every borough. London-wide asking prices fell by an average of £12,600 - or 4.3 per cent - since early last month.

Some areas were hit harder than others. In the most expensive boroughs, asking prices have dipped by about two per cent in five weeks. But they are down 9.9 per cent in Hammersmith and Fulham, 8.8 per cent in Kensington, and 8.3 per cent in Westminster, according to the figures produced by property website Rightmove.

There were also big falls in Merton (6.5 per cent) and Wandsworth (5.6). Best off were Lambeth, where asking prices fell by only 0.8 per cent, and Bromley, where they fell 1.6 per cent.

The average asking price in London, which was £291,160 in early July, is now down to £278,519.

Miles Shipside of Rightmove said: "The London market has seen a rapid cooling off in house prices over the past three months.

"Prices were still going up in May and June, but this month has seen a spectacular reversal of fortune. However, prices remain higher than they were in April and 7.7 per cent higher than in August last year."

The Rightmove figures confirm the trend identified by price monitor Hometrack, which this month reported London sale prices down by 0.4 per cent in July, with falls as steep as 1.9 per cent in some areas.

Today's figures suggest the reduction in sales prices will continue apace in coming months.

This week, members of the Royal Institution of Chartered Surveyors (RICS) reported falling prices in parts of southern England.

RICS London spokesman Jeremy Leaf said: "July was a challenging month. People thinking of buying reacted adversely to expectations of further - albeit modest - price reductions." James Gubbins, of agents Dauntons in Pimlico, where asking prices fell particularly sharply, said: "Buyer caution, with regard to interest rates and the summer holidays, has done much to quieten the market.

"In response, many sellers have reduced their prices and this is beginning to have a knock-on effect."

Nationally, house prices have also dropped, although not so dramatically as in the capital. Asking prices in England and Wales fell by two per cent to an average £192,335.

Asking prices are 2.4 per cent lower in the South-East and 2.1 per cent lower in the South-West, while smaller falls of less than one per cent were recorded in East Anglia.