House prices fell by 0.6% during August as the property market responded to the recent rises in interest rates, latest figures showed today.

Britain's biggest mortgage lender Halifax said hikes in the cost of borrowing were now acting as a brake on house price growth.

But the group stressed that monthly price falls were part of the normal fluctuations of the market, adding that this was the 10th monthly drop during the past five years, a period in which house prices have more than doubled.

House prices have risen by only 1.8% during the past three months, significantly below the rise of 6.5% recorded during the previous three months.

The latest figures are in line with those reported by Nationwide Building Society earlier this week, which showed house price growth had stalled to 0.1% in August, down from a jump of 2.1% in July.

They are also consistent with survey evidence from the Royal Institution of Chartered Surveyors which has showed a weakening in both demand and price growth, while property website Rightmove recently said average asking prices had fallen by more than £1,200 during the last two weeks of August.

Friday September 03, 2004