New figures show that the asking price of homes has risen by 1% during the past month as new sellers failed to price their properties realistically.

Properties in England and Wales now have an average £229,691 price tag after asking prices rose for the first time in five months during the four weeks to October 11.

Despite the recent "financial mayhem", property website Rightmove warns that many people are failing to price realistically and are tempted to think that their own home is more desirable than others on the market.

Rightmove also said that estate agents were competing for the few homes that were being put up for sale, on the off-chance that they could make a sale and boost their revenues before Christmas.

But even though asking prices are on the rise, house prices have still fallen by 4.9% during the year to mid-October, the biggest drop ever recorded by Rightmove.

The traditional autumn bounce in the market, which usually sees prices rise by around 2%, was also more muted than usual.

Miles Shipside, commercial director at Rightmove, said: "Any potential buyer will drive a hard bargain, so the temptation for sellers to price up and negotiate later may seem like a good idea.

"These are not the tactics of sellers in real financial hardship, and it would appear that the economic downturn has yet to become an everyday reality to most people."

But he warned that as unemployment rose, leading to a surge in forced sales, prices would be driven down further.

The level of unsold property on estate agents' books remained historically high during the month at an average of 76, due to the lack of buyer activity and sellers' reluctance to accept a lower price.

However, the group said there did appear to be pent up demand, with "property vultures" circling the market looking for the right deal.

The events of the past few months would have long-term consequences for the housing market, which was unlikely to ever be the same again, Mr Shipside said.

He added that lending was likely to remain restricted compared with before the credit crunch, and first-time buyers were likely to continue to need to save larger deposits than previously.

Copyright © PA Business 2008