As a result, the average property price now stands at £268,282.

The drop meant that the rate of annual house price growth also slowed considerably, from the 9.5% registered in September to 7.2%.

Robert Gardner, chief economist at Nationwide, said that the market had “undoubtedly been impacted by the turmoil following the mini Budget.”

He said: “Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.

“The market looks set to slow in the coming quarters. Inflation will remain high for some time yet and bank rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.”

Tomer Aboody, director of property lender MT Finance, said that a slowdown in prices was “no surprise” given the political uncertainty and interest rate fluctuations of late.

He added: “Rising cost of living and higher interest rates translate into less money in people’s pockets and therefore a different approach, until these higher costs become the norm.”

Will the stamp duty cut soften the blow?

Karen Noye, mortgage expert at Quilter, noted that while the housing market had shaken off “multiple blows” in recent years, it had not been able to dodge the impact of the mini Budget and the cost-of-living crisis.

She added that the severity of the downturn was still up in the air, adding: “One of the few policies from the mini Budget to remain in place was the stamp duty cut. If this continues the size of the house price drop might be lower as more people still opt to take advantage of this tax saving despite the economic backdrop. 

“Similarly, the UK suffers from a serious lack of housing stock. This pumps up demand because there is so little available. This once again could make any house price fall softer.”

House price falls are ‘welcome’

Any fall in house prices should largely be welcomed, according to Marc von Grundherr, director of Benham and Reeves, even though it may “strike fear” into homeowners.

He explained: “The monumental levels of house price appreciation seen throughout the pandemic market boom just simply aren’t sustainable and it’s far better the market steadily returns to normality, rather than crashing back down to earth with a bump.”