It is no secret that the property market is struggling, but investors in Rightmove, the operator of Britain’s largest housing website, were rattled by news that not only does Rightmove have to contend with falling prices, it also will soon be facing competition from a free rival.

The National Association of Estate Agents (NAEA) has confirmed that it will establish a free property website, possibly as early as September. The website, developed at the request of the trade group’s members, is in beta testing and estate agents are already uploading their properties. NAEA’s 10,000 members – who pay an annual membership fee of £175– will be able to advertise properties for sale or rent on the site for no extra charge. Rightmove, which has about 80 per cent of total property page views when calculated on a monthly basis, charges estate agents £495 to advertise.

Analysts said that Rightmove may come under pressure to reduce its prices, but conceded that it would be difficult for a newcomer to break into the market. Moreover, they doubted that estate agents would risk cancelling their Rightmove subscription.

Rightmove’s own latest survey of the sector, released yesterday, underlined the tough trading conditions in its core market and exacerbated fears about the impact of its new rival. Sellers aggressively cut prices in July, the survey showed, with average asking prices down 2.3 per cent. The average unsold stock of property per estate agent increased to record levels, despite the dramatic price cuts and a reduction in new instructions. Rightmove’s shares fell 14¼p to 305¾p.

Overall, the FTSE 100 fell 4.6 points to 5,450.2 as Rightmove’s gloomy survey, combined with downbeat broker comments, hit bank stocks.

Analysts at Lehman Brothers said they remained “negative” towards British domestic banks, adding that impairment charges are likely to increase as the economic slowdown deepens. Bank shares were further depressed by a British Chambers of Commerce report, which gave warning that a recession was likely to descend on Britain within the next six to nine months. Lloyds TSB fell 6p to 306p, HBOS slipped 3½p to 299½p and Royal Bank of Scotland was down 4¼p to 228½p.

Big oil users such as British Airways, down 8¼p to 252¾p, and Carnival, the cruise ship operator, down 47p to £19.38, fell as oil rose as high as $115 a barrel because of worries that supply could be threatened by Tropical Storm Fay, which may hit oil and gas production in the Gulf of Mexico. Oil prices dropped later in the session.

Overall losses were offset by miners such as BHP Billiton, up 8p to £15.37, which posted record annual results. Mining stocks were also buoyed by rising commodity prices. Kazakhmys added 30p to £12.03, Anglo American rose 56p to £27.91 and Rio Tinto was 78p higher at £46.83.

In the FTSE 250, Michael Page, the recruiter, rose 25p to 342½p after reporting a 22 per cent rise in first-half profits. Adecco, a potential suitor, reiterated its interest in Michael Page, further boosting the recruiter’s stock.

— New York: Shares in Fannie Mae and Freddie Mac, the lending giants, slid 20 per cent, amid fears of further mortgage losses, undermining stocks. The Dow Jones industrial average closed down 180.50 points at 11,479.40.

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