This is according to the Halifax House Price Index which recorded a 0.4% drop in prices in September compared to 1.8% in August.
Over the last year house prices have plunged by 4.7% and a typical home in the UK now costs £278,601 according to Halifax.
The South East of England has seen the biggest hit when it comes to house price falls with average prices dropping by 5.7% over the last year. London is still the most expensive place to buy a property – the average house price in the capital reported as £525,678.
Northern Ireland is the most resilient, meanwhile, with values declining just 0.2% over the year.
Kim Kinnaird, director, Halifax Mortgages, said: “Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales.
“Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.”
She added: “Many economists and financial markets predict that Base Rate will remain higher for longer, with any significant cuts appearing unlikely until inflation gets closer to the Bank of England’s 2% target.
“Overall, these factors are likely to keep mortgage rates elevated in comparison to recent years, constraining buyer demand and putting downward pressure on house prices into next year.”
Property market resilience
Halifax’s analysis showed the average house price, currently £278,601, whilst falling is still fairly close to the figures experienced in early 2022.
Karen Noye, mortgage expert at Quilter, said this is significant and homeowners should not be too alarmed by falling values. She explained: “So far much of the house price drops have only reduced from slightly bloated levels engineered by the stamp duty holiday during the pandemic.
“Interestingly, despite the recent fluctuations, property prices have risen by 1% since the Base Rate hike in December 2021.
“This indicates that the market, while impacted by various external factors, has shown a degree of resilience in the face of what has been a cost-of-living storm.”
