House prices in England and Wales dropped 0.3% to £158,300 in August, due to a fall in demand and a rise in the number of new properties on the market, according to figures from property intelligence group Hometrack.
The figures showed a 2.4% rise in the number of properties available for sale in August, while the proportion of people looking to move home fell by 2.2%, down for the second consecutive month.
Maintaining that the latest fall in demand represented more than just a seasonal blip, Hometrack said the average time taken to sell a property rose to 8.9 weeks - the highest level for over a year.
The proportion of the asking price being achieved fell to 93.5% from 94% in the previous month, according to Hometrack.
Richard Donnell, director of research at Hometrack, said: "The unmistakable fact is that the availability of homes for sale has improved markedly and this has reduced the support for house prices provided by the scarcity of housing for sale over 2009 and early 2010.
This comes at a time when there is growing weakness on the demand side - a weakness which represents more than just a seasonal blip. We expect further modest price falls in the coming months."