Oxford house prices fell the third fastest in the country in August, according to figures from leading property website Hometrack.

Prices in Oxford fell by 0.7 per cent, while prices for England and Wales as a whole fell by just 0.1 per cent. The average price of a house in Oxford is now £211,900 compared with a national average of £152,100.

The only two boroughs with steeper falls were Croydon with a drop of 1.9 per cent and Brighton at 1.3 per cent.

Figures for Oxfordshire put the county just outside the top five for steepest drop in prices with a dip of 0.3 per cent. An average house in the county now costs £217,300. Steeper dips were recorded in Surrey, north and east London, East Sussex, and Berkshire - all at 0.4 per cent.

Robert Harrison, of Oxford estate agents Cluttons, said: "We have seen a drop in people registering. But it is too early to say whether that is just because it is August, traditionally a quiet month, or the start of a trend."

News of the drop in Oxford prices came after the Oxford Mail reported on Saturday that the price of property in the majority of the UK's major university towns had doubled during the past five years - but that Oxford's rise was lower than average. Halifax Estate Agents said property prices in 10 of the 13 top university towns and cities outside London had risen by more than the national average of 103 per cent since 1999.

However Oxford's rose by 99 per cent - compared to 100 per cent in Cambridge, 133 per cent in Sheffield, and 130 per cent in York. The biggest increase in prices was seen in Bath, where the cost of the average home soared by 156 per cent to £258,379.

Oxford University economist Gavin Cameron, who has made a speciality of world housing markets, warned on the website Housing Outlook: "The most exposed markets are those like the UK, where households typically hold a great deal of floating rate debt.

"The joint consequence of rising mortgage payments and falling house prices could be severe, especially if the financial system itself comes under stress."

Hometrack said the number people registering as potential buyers had also fallen by four per cent in August.