London home sellers slashed their asking prices by the most in more than six years this month, adding to signs that the property market in the capital is coming off the boil.

London values fell by 5.9% from the previous month to an average £552,783, the biggest drop since December 2007, according to Rightmove. Nationally, prices declined 2.9%, a record for an August month.

While property demand usually weakens during the summer, Rightmove said the slump this year was steeper than it expected. Tougher new mortgage rules introduced by the BoE, as well as an increased anticipation of higher interest rates, are putting pressure on the market after a surge in values raised concerns that a bubble may develop.

“Buyers and sellers are becoming increasingly aware about personal finances, given that the cost of mortgages are going up and regulators are trying to bring availability down,” said Miles Shipside, a director at Rightmove. He added: “This limits what buyers are willing or able to pay, and helps moderate sellers’ price expectations.”

Some of the biggest price declines in London were recorded in affluent boroughs including Kensington & Chelsea and Camden, which were down by 7% and 7.2% on a month ago, according to the report.