Home buyers need to adopt a more realistic approach to purchasing a property, even if it means settling for less than their 'dream home', the National Association of Estate Agents has stated.

The comments come after a recent study undertaken by the Alliance and Leicester found that just five per cent of Britons actually live in their 'dream home', with this figure dropping to three per cent in London.

"People are coming to realise that the property that they wanted through their rose tinted glasses is either not going to be there or is going to be very, very expensive," said Peter Bolton King, chief executive of the NAEA.

"Where you've got areas where there is less property available then people can't be as choosy as they perhaps can when the market is very, very good," he added.

According to the latest Assetz House Price Watch report, average property prices across the country increased by £1,276 between May and June, with the recent rate rises doing little to dampen the market growth.