(Bloomberg) -- UK property asking prices fell at the sharpest pace in almost 2 1/2 years as a traditional summer lull combined with increased caution about the outlook for the economy.

The cost of new homes listed for sale fell 1.3% in August, reducing the annual pace of growth to 8.2% from 9.3%, the property-search website Rightmove said Monday. The most expensive homes suffered the largest drop, and London had the biggest decline in the country.

Rightmove said prices typically fall in August when buyers go on holiday and focus on getting children back into school. Other reports from the Bank of England and mortgage lenders indicate that higher interest rates and concern about a cost-of-living crisis are starting to weigh on the property market. 

“Several indicators point to activity in the market continuing to cool from the lofty heights of the last two years,” said Tim Bannister, director of property science at Rightmove. “It’s likely that the impact of interest rate rises will gradually filter through during the rest of the year.” 

For now, a shortage of properties coming to market along with strong demand are likely to keep prices from plunging. Rightmove noted a 20% increase in buyer demand since 2019 before the pandemic started.

The figures underscore a steady surge in the cost of property over the past two decades Rightmove has been conducting its survey, leaving many buyers straining to afford to buy.

Rightmove said housing costs have more than doubled in the past 20 years, rising 134% to £365,173. That outstripped a 76% increase in average wages over that period and a 93% gain in the Retail Prices Index, a measure of inflation.

Price growth has slowed in the past few months, taking some of the heat out of a market that was spurred on last year by a tax break on purchases. 

A more traditional pattern of sales is starting appear, said Josephine Ashby, managing partner of John Bray Estate Agents in North Cornwall, which contributed to the report. Buyers are having “sensible conversations about choice and value rather than the frenzied bun fight we experienced during the pandemic.” 

  • Inquires by buyers are down 4% on 2021 levels but are higher than pre-pandemic
  • New listing are up 12%
  • Average montly mortgage payments for first time buyers with a 10% deposit exceeded £1,000 for the first time

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