Average property prices surged 2.7 per cent last month as owners of higher- value homes rushed to market to avoid compulsory home information packs (Hips). Experts are predicting more turbulence in the months ahead as the residential property market tries to absorb the effects of stalling buyer confidence, tighter mortgage terms and the probable extension of the Hips regime.

Rightmove, the property website, predicts that prices could drop by 5 per cent for one and two-bedroom homes when they can no longer be sold without a Hip.

The website’s latest price report indicates that the number of three-bedroom properties for sale jumped by 65 per cent in the first week of September, boosting the average asking price of a UK property to £241,642, up from £235,642. The rise reversed the asking-price decline of 2.6 per cent reported in August and pushed the rate of annual growth back up, to 10.4 per cent.

Owners of three-bed or larger homes put on the market since September 10 have been obliged to supply a pack of legal and energy performance information, at a typical cost of £300. Fears about the reliability of the Hips — and the deadening effect of extra paperwork — have blighted the introduction of the scheme.

Miles Shipside, the commercial director of Rightmove, said: “Legislative tinkering involving future cut-off dates has a history of unbalancing markets. In a stable market this presents fewer dangers, but in today’s more sensitive financial environment the effects can be more exaggerated.”

The distortion caused by the scheme to speed up housebuying in England and Wales was most acute in London. Asking prices in the capital leapt by 5 per cent — or £19,198, on average — to £403,637, breaching the £400,000 barrier for the first time, despite concerns about the prospects for the property market. Although prices dropped in Wales (down by 1.3 per cent) and the North (down by 0.7 per cent), they held steady in the West Midlands (up by 0.1 per cent), Yorkshire and Humberside (0.3 per cent) and the East Midlands (0.6 per cent).

Yet the average prices registered by Rightmove agents gained in the North West (up by 1.5 per cent) and in those areas with relatively high average prices: East Anglia (3 per cent), the South West (3.5 per cent) and the South East (4.7 per cent).

However, the surprise boost to asking prices is likely to have a subdued impact on final sales prices. The Rightmove index shows that the property slowdown is worsening: the average time on the market was the lengthiest in five years, at 85 days, and unsold stock reached a high of 67 per estate agency, a level not seen since 2004.

Mr Shipside said: “Buyers are not soaking up this extra supply at the moment, and sellers who need a quick sale will have to respond by pricing competitively. The next few months should be a good time to pick up a deal as some sellers become more desperate to find a buyer.”

Even the previously immune prime market has begun to wobble. Asking-price rises in prime London locations, such as Kensington and Chelsea (up by 4.5 per cent), were outperformed last month by less expensive central locations such as Hammersmith and Fulham (8.8 per cent), Camden (6.6 per cent) and Islington (6.4 per cent). But many of the areas that likewise have been buoyed this year by overspill demand have begun to sag: Wandsworth asking prices rose by 2.6 per cent and those in Richmond upon Thames crept up by 1.5 per cent. Kingston upon Thames prices dropped by 0.5 per cent.

The latest Knight Frank index shows that prices for prime Central London homes rose by only 1.2 per cent last month, the slowest monthly rate since August last year. The declining confidence registered last month extended across the market.

The Royal Institution of Chartered Surveyors (RICS) reported last week that new-buyer inquiries had been in decline for ten months and were dropping at the fastest pace in 4½ years. The RICS report also suggested distortion prompted by the introduction of the Government’s Hips scheme: the supply of three-bedroom homes was on average 37 per cent lower, but down as much as 87 per cent in East Anglia and 82 per cent in the West Midlands.

Last month the RICS reported that the supply of four-bedroom homes on the market had dropped by 51 per cent on a year earlier after the introduction of the scheme in August. But the latest Rightmove report shows that the supply of four-bedroom homes has partially recovered since then.

The Government has yet to confirm when Hips will become compulsory for all residential sales, but it had hoped to complete the introduction before the end of this year.