Evidence over the last three months from Rightmove and RICS show a slowing down in house price rises. More importantly, with 8% more houses coming onto the market than at the same time last year, the underlying drivers of the 2002 house price boom are giving way to more normal market conditions.

The Bank of England’s surprise decision to cut interest rates by one quarter of one per cent came in the context of a welcome slowing down in house price inflation.

Rightmove’s Real-time Property Report shows that asking prices have been virtually static for the past three months. The average UK house is worth £155,481 now, compared to £155,467 in October.

According to Rightmove, enquiries from prospective buyers are down by 6% compared with January 2002, while requests to estate agents from people considering selling are up by 14%. There has been a surge in properties coming onto the market in the last four weeks, 8% higher than in the same period a year ago. The total stock of houses in the UK available for sale is over 400,000 for the first time since early in 2002.

The 2002 house price explosion was driven by a property ‘famine’ according to Miles Shipside, Housing Expert at Rightmove.co.uk. who commented, "Owners were simply not putting their property on the market until they had found a property to buy. This supply shortage created an immediate upward pressure on prices."

Rightmove reports that London properties are taking longer to sell than for several years (at 75 days compared to 71 days a year ago).

"The boom in house prices in 2002 has clearly been a concern to the Bank and constrained the room for interest rate cuts by the MPC in previous months," commented Ed Williams, Managing Director of Rightmove.

Williams continues, "The housing market did not create the need for this rate cut, though it will be widely welcomed by homeowners. Rather, the rest of the economy needed the cut. The housing market coming off the boil helped make it possible.”

“Nothing in the data we see has ever suggested a crash in house prices. This interest rate cut makes the predictions of the doomsayers look even less likely."

Rightmove reported a 0.4% decrease in its monthly report in January. Halifax and Nationwide house price figures are beginning to capture the slow down reported by Rightmove and the RICS in November. However, at 1.5% and 1.7% respectively in January, they are still reporting the state of market in the autumn.

Land Registry figures on Monday are expected to show average house prices of £154,000 or more, up at least 5.4% on £146,150 reported for the third quarter of 2002, and 29.6% higher than Q2 2002. These relate to housing activity at the peak of the boom.