What do a £700,000 flat in Mayfair, a £3m townhouse in Notting Hill and a similarly priced house in the country have in common? All are prime properties that have seen more than 10% price growth this year, but whose owners have recently fallen victim to the rather nasty practice of gazundering.

Most homebuyers are familiar with gazumping, a typical feature of rising markets, in which someone has an offer on a property accepted, only to find themselves beaten at the last moment by a rival bidder. As conditions cool, however, gazumping’s equally ugly cousin is starting to put in an appearance.

Last seen during the recession of the early 1990s, gazundering – or “bid and chip”, as it has been rebranded for the Noughties – occurs when a buyer successfully bids for a house, then, just as contracts are about to be exchanged, ruthlessly chips away at the offer, forcing vendors to accept a lower price or lose out on the sale. Its reemergence is being seen by agents and property experts as yet another sign that the market is weakening.

The recent turbulence in financial markets, and the credit crunch it has caused, is having an effect. A report to be published tomorrow by Rightmove, the property website that tracks asking prices in England and Wales, shows that house prices have been flat for the past six months. Although prices in the four weeks to mid-October rose by 2.7%, this followed a 2.6% fall in the previous period. For the first time in 18 months, it seems, buyers are in a position to haggle. Even in the capital’s leafier streets and larger houses, a few cracks are appearing.

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• Held to ransom

“Up until six weeks ago, there was no stopping it – almost all sales were in excess of the asking price,” says Peter Rollings, managing director of Marsh & Parsons, a chain of estate agents based in west London. “If you didn’t pay, you didn’t get it. Buyers would bid over the guide price even if the house had some blemishes, such as damp or road noise, confident that the market would keep rising. Now, people are less likely to take that view. Sentiment is different.”

He cites the example of a “very nice” house in Notting Hill he has been handling. When the property came on to the market in June, the buyer had to bid “substantially over” the £3m guide price to secure it. But the mood had changed sharply by the end of last month, when the time came to exchange. The day before, the bidder knocked more than £100,000 off his offer. After some serious negotiation, a deal was struck – but at 3% below the previously agreed price. “It is a market-driven phenomenon,” Rollings says. “It is the first example I’ve seen, but I’m expecting a lot more of it.”

Figures from the national estate agency Knight Frank show a growing mismatch between asking prices and actual achieved prices, especially in London. In June, for example, properties changed hands at an average 5% above the asking price – now they are going for 3% below, the lowest ratio for 18 months.

What looks like only a small difference is highly significant. “It doesn’t take much either way to show a strong market or a weakening one,” says Liam Bailey, head of residential research at Knight Frank. “The ground rules have drifted a lot since the summer. Six months ago, you could have been bullish, but do that now and you risk your property hanging around on the market. The market is sticky. People think that prices go up over time, but they aren’t going up. They are staying flat. It will take until the new year for asking prices and achieved prices to get back in line.”

Until this happens, sellers have to be more realistic about what they can ask, and accept that buyers will have room to renegotiate. And this means more last-minute gazundering, especially since, as has increasingly been the case in recent weeks, the valuations put by mortgage lenders on properties have been more conservative than in the boom days of last spring.

“A two-tier market is emerging,” says Jasper Fielding, a partner at Strutt & Parker’s office in Moreton-in-Marsh, in the Cotswolds. “There are those properties that are selling and those that aren’t. It is happening across all price brackets. There is much more price sensitivity this autumn.

“The element of competition that was so strong in the spring just isn’t there any more. Instead of half a dozen buyers chasing a house, today there are only one or two. Money has become more cautious.”

Not that gazundering always works, says Chris Brown, a Derby-based estate agent and vice president of the National Association of Estate Agents. “Buyers must also be aware that if they start to play games at the last minute, this could backfire. I have known a number of sellers who have taken a dim view of this and withdrawn on principle.”

His advice to sellers? Hold your nerve. “You have to ask yourself if it is a bona-fide offer,” Brown explains. “If you think it is legitimate, for example, and the survey shows damp rot, then you should consider it. You can negotiate around it.

“It is different if you think it is simply a matter of sport to save money. Then you should be more wary. Can you trust the buyer? Will they do the same thing again? If you think you can find another buyer for the same price, you can put your house back on the market.”

Which is exactly what the owners of Ebrington Hill, a five-bedroom house with just under 17 acres near Chipping Campden, did when their buyer tried to reduce his offer by 10% just days before they were due to exchange. The 19th-century house in Gloucestershire was put up for sale for £3.2m in June, when the market for prime country houses was booming. The sellers, who have declined to be named, had accepted an offer closer to £3.5m. They decided that they weren’t going to be forced to accept a lower bid, and put the house back on the market a fortnight ago for its original £3.2m asking price.

Peter Wetherell, director of Wetherell, a Mayfair estate agency, encountered a similar situation recently with the sale of a £700,000 Mayfair flat. “When one of our buyers tried to chip the price down, we just phoned the second in line,” he says. “That time, the buyer had to pay the penalty and lost out.

“We’ve had quite a few incidents of gazundering in the past six weeks, all wanting to chip about 5% off the asking price. If it becomes endemic, it is a sure sign that the market is going down, but right now it is just a pause for reflection.”

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