House prices have plummeted by 1.7% in August, the Rightmove House Price Index reveals.
Newly marketed property is down by £4,091 as over supply coincides with holidaying buyers.
The average house price in England and Wales slipped to £232,241 as Rightmove registered its biggest drop of the year, following on from a 0.6% fall in July.
But search activity hit a new record on the Rightmove website as buyers looked for prospective homes.
Demand remains high but affordability is still a key issue with six out of 10 renters admitting they would like to buy but can not afford to.
Miles Shipside, director of Rightmove, says: “No one really wants to come to market in August unless they have to. It shows these new sellers have a compelling need to sell, as they have lopped over £4,000 off the average asking price.
“Those who marketed earlier in the year but have yet to find a buyer may have to do a bit of pruning of their own to beat this new competition. Holidaying buyers can relax on the beach while back at home sellers are reducing the cost of their future property by the price of the family holiday.”