I think it's all down to market sentiment. Sellers tend to lag behind the news, while buyers tend to react much more quickly. That's because buyers usually watch the news and the property sites avidly; they get obsessed with it. When I was looking to buy, I checked rightmove and the newspaper property sites a few times a day! And I couldn't understand why, back in Jan, when there were 30 or so buyers at every open house in London, more property owners weren't trying to cash in.
But sellers aren't so active, they're more reactive. Prices started really accelerating in Sept 2013. It took around 6 months for this to filter through to the mainstream media - it started with a couple of news stories about open houses here and there on property pages, and then gradually built up until it crept off the property pages and onto the headline pages. By January, it had become dinner party conversation and so homeowners who hadn't been actively paying attention to house prices were suddenly being hit over head with the news that their house was worth a lot more. It took them a few months to make their decision to sell, get their act in gear, arrange an estate agent, etc. That took us up until April/May. So, come June, there was a flood of new properties onto the market.
But, unfortunately for the sellers, by May, buyers had already been struggling with open houses and sealed bids for 9 months. They were fed up - they'd lost patience and just couldn't get themselves worked up into a frenzy any more. In London, the richest/least cautious had already been creamed off the top by winning the sealed bids. Add to that news about poss interest rate rises, and talk in the media of a bubble ... and the fear of being priced out forever and the sense of urgency that leads to open houses and sealed bids started to wane. This meant that fewer people turned up to open houses, and agents started to have to actually phone up buyers, and this all led to buyers being more reassured that they could take their time. Those who had put in offers before April found they couldn't get finance because of the MMR. So all of that combined together to create a drop in buyers just at the very same time as there was a big rise in sellers.
So yep, it is the summer holidays, but combined with all the stuff above! It's psychology.
I don't agree 100% with Noddy and Roneik though because there did used to be those 30 buyers for every open house in London just 3 months ago. So, if the sellers get fed up and withdraw their properties from sale, the buyer-seller balance will reverse again. Prices won't continue rising forever, but they might not drop. It depends on market sentiment, media reporting, etc, much more than actual market fundamentals. Unless the fundamentals change drastically.