Property sellers are pushing up asking prices to “unrealistic” levels to counteract the huge discounts that bargain-hunting buyers are demanding, according to estate agents.

Average asking prices rose by 1 per cent this month - despite a 1.3 per cent decline in house prices, because sellers are anticipating that potential buyers will attempt to secure reductions of as much as 25 per cent off the market price.

Figures from Rightmove, the property website, showed that the average asking price has increased from £227,438 in September to £229,691 now. Sellers in the South East and West Midlands are showing the greatest optimism, asking 2.6 and 2.8 per cent more respectively than in September. Only sellers in Wales and the North of England have reduced their asking prices in the last month, Rightmove said.

Agents said that falling house prices had given buyers the confidence to ask for reductions, but that some sellers also have “unrealistic” expectations about the sums their homes can fetch. Movewithus, an estate agency network, has estimated that four in five properties currently on the market will not sell in the current market conditions.

Miles Shipside, director of Rightmove, said: “Any potential buyer will drive a hard bargain, so the temptation for sellers to price up and negotiate later may seem like a good idea.”

The increase in asking prices comes as some agents reported a fourfold increase in the number of transactions being gazundered since the beginning of the market downturn last Autumn. Gazundering, the opposite of “gazumping” - is when a buyer demands a last-minute price cut right before contracts are exchanged, forcing sellers to accept amounts thousands of pounds lower than the original offer.

Robin King, of Movewithus, said: “Gazundering is definitely on the rise.Unfortunately for sellers who need to move, it is sometimes best to just take the medicine and accept the lower offers in case prices fall further and the next one is even lower.” Cluttons, an agent based in the South east, said that the number of sales being gazundered had risen from 5 to 20 per cent in the last year.

Analysts have predicted that house prices will fall a further 15 per cent by the end of next year, before the market can recover. Rightmove said that the severe shortage of new sellers was also partly responsible for the rise in asking prices, with agents trying to make as much money as possible from existing stock in the run up to Christmas. Agents are struggling to sell one property a week - the lowest number of sales since 1978, according to the Royal Institution of Chartered Surveyors.

However some agents have reported an increase in turnover in the last few months, attributing the rise to realistic pricing.

Melfyn Williams, of Williams & Goodwin, an agent in Anglesea, said: “By the end of June, we were 30 per cent up on the previous year. We are only halfway through this month, and we have already done as much as we did in the whole of October 2007. It is because our realistic prices are attracting realistic offers - and the properties are selling.”

Knight Frank, the estate agents, said that sales volumes are between as much as 60 per cent lower than average in many of London’s most desirable postcodes, reflecting the lack of realism among vendors in the Capital.

Liam Bailey, head of residential research at Knight Frank, said: “After over a decade of rising prices in the capital, it is difficult for many homeowners to accept that their homes may be worth as much as 20 per cent less than a year ago. There are a growing number of rejected offers for properties, with some as much as 30 per cent below asking price - a reflection of where many buyers expect prices to fall to.

“Sellers are unwilling to accept agent advice on appropriate asking prices or offers. Many properties are being withdrawn from the market or remain unsold for long periods of time.”

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