The average UK house price fell by 0.3% in September, following a rise of 0.2% in August, the latest Halifax house price index shows.
The annual rate of growth eased to 1.3%, down from 2.0% in August, to the slowest annual rate since April 2024.
Northern Ireland continues to lead the fastest annual property price inflation, with average property values up 6.5% over the past year (although down from 7.9% last month).
Scotland recorded annual price growth of 4.5% in September, with Welsh property values rising by 1.9%.
In England, the North East recorded the strongest annual growth with prices up 4.8% to £180,443, followed by the North West at 3.9%.
The South West saw a second consecutive price fall of 0.2%, although an improvement from the 0.7% fall seen in August.
Meanwhile, prices are up only very slightly on the year in London (0.6%) and the South East (0.2%).
Amanda Bryden, head of mortgages at Halifax, said: “This slight monthly dip in house prices reflects a housing market that has remained broadly stable, prices are up 0.3% since the start of the year.
“It’s also important to remember that prices vary widely depending on characteristics like location and property type. As a result, many homes are available at a cost well below this headline figure. For example, for those looking to take their first step on the property ladder, the typical first-time buyer home costs £236,811, up 1.7% year on year, with pockets of even greater affordability to be found across different regions.
“While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence.
“Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year.”
Professor Joe Nellis, economic adviser at MHA and a co-creator of the Halifax house price index, commented: "UK house prices in September fell by 0.3% from August, as the market reacts to affordability pressures mounting and speculation around property tax reforms in the Autumn Budget causing potential buyers and sellers to pause.
"Prices are now only 1.3% higher than a year ago, a clear slowdown from the 4.6% year-on-year growth in September 2024 and the faster growth rates seen in the second half of 2024 more generally.
"The actions of first-time buyers drive the market, and they remain under intense pressure from high deposits, elevated mortgage rates, and rising living costs, as well as having a particular interest in potential property tax reforms.
"Yet there could be some light at the end of the tunnel. There is speculation that the Treasury is considering spreading stamp duty land tax (SDLT) payments across several years to jump start the property market. Breaking SDLT into instalments would lower the cash needed at the point of purchase, unlocking capital and giving buyers more breathing room for deposits, moving costs, and renovations, while helping more first-time buyers onto the housing ladder.
"Further relief is emerging as fixed rate mortgages dip below 4%, but borrowing hurdles remain high.
"Price growth is expected to pick up at a gentle pace through the remainder of 2025, with a slight rise in 2026 if inflation cools and mortgage costs fall further. But with affordability stretched and policy decisions looming, the next few months could set the tone for whether the market cools further or stabilises into a soft landing.
"Ahead of the Budget, slower house price growth is not what the Chancellor would have wanted, with the chance of reduced stamp duty receipts narrowing her room to manoeuvre on spending pledges. We wait to see if her decisions on 26th November will do anything to kick the market into gear."
Jason Tebb, president of OnTheMarket, added: “Despite the average house price decreasing slightly in September, the market continues to demonstrate resilience, shaking off external economic concerns and holding up remarkably well even as speculation continues as to what the Autumn Budget might hold in store.
"The average price is only part of the picture as behind the headline figure are considerable regional variations and differences according to property type.
"Confidence among buyers and sellers has been boosted by base rate cuts over the past 13 months. Our own research shows that those focused on buying or selling remain optimistic about their own prospects, with the majority of buyers confident in their ability to raise the funds needed for their next purchase. As lenders boost borrowing ability by continuing to relax criteria, any further rate reductions from the Bank of England will help stimulate the market and encourage activity.”
