Home values saw their biggest monthly drop of the year as figures show asking prices fell by 2.2% in the past month.

The average property price in England and Wales stood at £222,762 for the four weeks to August 8 - down a little more than £5,000 on the previous month.

However, the decline was in line with the summer lull in activity and a similar fall in August 2008, according to property website Rightmove.

Asking prices were 3.1% lower than they were during the same period last year and remained unchanged from the previous month.

Five of the previous seven months this year have seen a rise in property values. Rightmove said although buyers were increasingly confident about the market, lack of mortgage finance continued to be a problem.

Miles Shipside, commercial director of Rightmove, said: "After several months of activity and prices revving upwards from last winter's low point, both will start to hit the limiter without more mortgage finance.

"In spite of pent up demand, the market and pricing is boxed in by restrictive lending criteria put in place to ration mortgages, given the lack of funds available to lenders."

Rightmove said buyers were continuing to return to the market, with the group recording its busiest ever month for traffic, despite the fact that there is usually a fall in househunting activity during the summer, as potential buyers go on holiday.

Buyers are also feeling increasingly confident that the market has stabilised, with three-quarters of people saying they do not expect there to be further price falls during the coming 12 months.

But there continues to be a shortage of properties for sale, with 82,700 homes put on the market during the month, 23% fewer than in August last year when there was already a supply shortage.

It is also around half the level of new properties that were put up for sale in August 2006 and 2007.

The North West was one of only three regions to see a price rise during the month, with asking prices jumping by 1.4%, followed by the East Midlands at 1.2% and the North at 0.8%.

East Anglia saw the biggest monthly dip in asking prices with these dropping by 8.3%, although the group cautioned that the figure was likely to have been exaggerated by summer selling patterns.

The West Midlands and Greater London both recorded drops of 3.8% during the month.

Copyright © Press Association 2009