UK house prices fell 0.9% between September and October, according to Nationwide.

This marks the first monthly decline since July 2021 and the largest price fall since June 2020.

The fall took the average UK property price down to £268,282. Annual house price growth also dropped sharply last month, to 7.2% from 9.5% in September, said the building society.

Robert Gardner, Nationwide’s chief economist, said: “The market has undoubtedly been impacted by the turmoil following the mini-Budget, which led to a sharp rise in market interest rates. Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.

“For example, the increase in mortgage rates meant that a prospective first-time buyer (FTB) earning the average wage and looking to buy a typical FTB home with a 20% deposit would see their monthly mortgage payment rise from 34% of take-home pay to 45%, based on an average mortgage rate of 5.5%.”

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: “House prices fell in October, as the impact of September’s mini-budget tore through the mortgage market, trampling buyer confidence, and laying waste to their borrowing plans. The question is whether we’re seeing the market brake, or start to break.

“Even before the mini-budget, a property slowdown was on the cards, as interest rates continued to climb, household bills mounted, and property prices rose even further out of reach. They were all bound to put the brakes on runaway house prices eventually.”

What’s coming next?

Gardner added that the market looks set to slow in the coming quarters. He explained: “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.”

Andrew Montlake, managing director of Coreco, added: “House prices are set to come under further pressure during the winter months, but the sizeable drops of 10%-15% that some are predicting are frankly implausible given the sheer lack of supply and the fact that the jobs market is still strong.”