Property asking prices have fallen by 1.6% in July in the first drop seen this year, new figures from Rightmove show.
The number of unsold properties listed with estate agents has also soared to a record high, a report from the property website said.
After six successive monthly increases, average asking prices fell by £3,797 to £236,597 during the month. It is the biggest drop for July since 2008 when the prices slid by 1.8%.
Homeowners are being prompted to lower their prices because of weak demand, which has meant nearly seven out of 10 properties arriving on the market this year have failed to sell.
Estate agents currently have an average of 78 homes on their books - an all-time high for this time of the year.
Rightmove director Miles Shipside said: "Summer sellers are more nervous about their selling prospects than the early birds who asked ever higher prices during the first six months of this year."