Homeowners in London have drastically dropped their selling prices, a survey shows.

A report from property agent Rightmove shows sellers in the capital have "recognised the need to price aggressively" in order to make homes more affordable.

As a result, London house prices have dropped 5.3 per cent in the last month, according to figures, and like many other parts of the country the capital has found itself in negative territory for asking prices year on year.

Miles Shipside, commercial director of Rightmove, said: "Londoners have so far been largely insulated from the price falls taking place elsewhere in the country.

"However, sellers who choose to come to the market during the peak holiday season generally have a greater need to sell, and as a result properties coming onto the market in July were on average £21,000 cheaper than last month."

He added that all but six of the 32 London boroughs had cheaper asking prices than last year.

But there may be good news for homeowners who are in the vicinity of new transport links, such as the Olympic-linked East London line extension that is due to open in 2010.

Mr Shipside said: "Areas that are about to benefit from improved transport links appear to be avoiding the worst of the storm that is setting in elsewhere in the capital."

He added that people looking for potential profit areas should "take up transport detective work as a hobby".

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