The rate of year-on-year annual house price growth declined for the eleventh consecutive month in July.

Assetz believes this is a temporary and forced correction in the market caused by lack of mortgage finance, rather than a crash and a general reversal in sentiment on property ownership.

It expects to see house price falls slow in the autumn of 2008, with prices beginning to climb again in spring 2009. This will be driven by a worsening property supply situation now that property development and construction is suffering a medium-term decline.

The average house price in June 2008, taken from the average house price provided by all five major UK indices, showed a decrease of £2,923, compared with the previous month’s average value, and a fall of £8,766 over the 12 months from July 2007, when the average price of a home was £213,407.

Stuart Law, chief executive of Assetz, said: “Media coverage regularly quotes the Nationwide or Halifax index alone, which are currently showing around an 8% fall in prices, with no recognition that these only represent a small part of the market that is entirely mortgage related and below the national house price average.

“It is clearly the bottom end of the market that is under the most pressure due to the current mortgage famine, with the top end showing great resilience. We are now witnessing a divide in the country – those who need high loan to value mortgages and those who don’t.”