Annual property asking price inflation has dropped by two per cent this month as the January interest rate rise caused sellers to moderate their price expectations.
In what is the lowest February figure for five years, monthly asking prices rose 0.9 per cent, well behind the traditional early year rise in housing market activity, reports Rightmove.
Even though the average property is now put on sale for £224,802, estate agents are continuing to report high levels of activity despite the number of properties for sale reaching a three-year low for this time of year.
This would usually point to a rise in prices but due to the climate of increasing interest rates, sellers are trimming their sales expectations.
Miles Shipside, commercial director of Rightmove, said that the Bank of England appears to have achieved its goals.
He said: "The shock tactic of one unexpected rate rise early in the year appears to have had the desired effect.
"With three interest rate rises in the last six months and the looming threat of another, it looks like we have finally reached the point where the market is highly interest rate sensitive.
"We are at a crossroads, and the path taken by those in charge of interest rate policy will dictate the direction of the housing market in 2007."
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