Signs of a property market slowdown seen last month are confirmed this month in a report that says the market is responding to four interest rate changes in nine months.

Property website Rightmove report prices in England and Wales rose by just 1.2% during the four weeks to July 10 compared with jumps totalling 5% during the previous two months.

However, says Rightmove, this masks significant regional differences: asking prices in the four regions of southern England saw either small declines or modest rises, while the regions of the Midlands, North and Wales continued to increase rather more strongly. Last month’s index reported some asking price falls in late May and early June, notably in Greater London and the South East.

This month, in Greater London prices rose by 1.0% from £288,385 to £291,160, while in the South East they also rose by 1.0%, from £238,263 to £240,593.

Modest declines in prices occurred in East Anglia, down 0.6% from £187,184 to £186,077, and in the South West, down 0.4% from £212,705 to £211,750.

It is no coincidence that the four regions where house prices are most expensive are those where affordability constraints and the impact of the rising cost of borrowing is beginning to have the greatest effect on property values.

In other regions, asking prices have risen strongly: in the North West, they rose 4.2% from £147,585 to £153,849, in Wales they were up 3.9% from £165,332 to £171,746, and in Yorkshire & Humberside they increased 3.0% from £139,890 to £144,075.

Smaller rises of 2.3% (to £142,197) were recorded in the North, of 2.0% (to £159,782) in the East Midlands, and of 0.8% (to £171,899) in the West Midlands.

Nationally, the average asking price rose 1.2% from £193,965 in June to £196,198 in July.

The year-on-year rate of house price inflation stands at 18.0%, up slightly on 17.2% last month – the seventh consecutive increase in the annual rate.

Despite the evident slowdown, the annual rate continues to rise, as house prices were virtually flat a year ago, in summer 2003.

Rightmove’s figure of 18.0% compares with annual rises of 19.1% from Nationwide and 21.5% from Halifax (both for June) and 12.2% for May in the ODPM’s ‘experimental’ index.

The slowdown the average rate of house price inflation mirrors a slowdown in activity levels in many part of the country, and higher stock levels of properties for sale in estate agents’ windows. With the onset of summer and the impact of four interest rate rises in nine months, the market indicator shows demand from buyers falling for the third consecutive month: it now stands at the lowest level for a year excluding the normally quiet month of December.