Average house prices fell to £366,999 month-on-month, according to figures from property website Rightmove.

And price reductions on unsold properties doubled to 8% from 4% in the same period last year.

Demand is now down 20% on last year, with first-time buyers the most heavily impacted, tumbling by 26%.

However, Rightmove stressed figures were in line with patterns seen in 2019, with prices dipping in the run up to Christmas.

The number of homes being reduced is also broadly similar to pre-pandemic years and buyer demand is still 4% above levels seen in 2019.

Buyers want economic certainty

The property site said the market has become increasingly price sensitive. And some new buyers are holding off to wait for increased financial certainty while others who were stretched are putting on the brakes.

Tim Bannister, Rightmove’s director of property science said: “The now largely superseded mini Budget sped up the slowing of market activity that we had been seeing since the summer, and we’re now in another state of limbo as we wait for any surprises or help in Jeremy Hunt’s Autumn Statement on Thursday.

“The frenzied market of the past two years has turned into a more normal market more abruptly and less smoothly than we were expecting. Though many are getting on with moves, especially those with a purchase already agreed, understandably there are people who are pausing for thought.

“Some buyers have decided to turn their attention to Christmas instead, and be part of the New Year jump in home-moving activity.

“There’s a group who are ready and able to move and are waiting on the sidelines for more financial certainty. Then there’s a group of first-time buyers or people hoping to trade up who were already stretching themselves financially and may now have had their plans dashed.

“It’s important to note that there isn’t a glut of unsold properties, and the average number of enquirers for the low number of available properties for sale is still over a third higher than it was back in October 2019, which is helping to prevent any price falls by more than is usual at this time of year.”

Sellers reduce house prices to get over the line

Tomer Aboody, director of property lender MT Finance, added: “As we head towards the end of the year and the desire to complete on a property purchase or sale intensifies, sellers are reducing prices in order to get transactions through.

“Rising costs and interest rates are having an impact but largely buyers and sellers remain resilient.

“With the expected higher mortgage rates already resulting in buyers and sellers feeling the pinch, many of the new properties coming to market are priced to reflect this – slightly reduced to allow for extra payments as well as building in any market reduction over the forthcoming 12 months or so.

“Thankfully, the interest rate pain could have been a lot worse but the markets are now factoring in a lower maximum predicted rate as they respond well to Rishi Sunak becoming Prime Minister.”