A North-South divide has emerged in the housing market as property prices are hit by higher borrowing costs.
As investors bet interest rates could start to fall by the spring as inflation cools, figures from the Office for National Statistics showed the average house price fell 0.1 per cent in the 12 months to September.
This was the first annual fall since 2012. A typical home costs £291,000.
The report showed prices in the North and Midlands are still rising while they are falling across the South.
The biggest increase in England came in the North East where prices were up 1.6 per cent in the 12 months to September.
Property slump: Figures from the Office for National Statistics showed the average house price fell 0.1% in the 12 months to September
They were also higher in the North West, West Midlands and East Midlands while there was no change in Yorkshire and The Humber.
By contrast, they fell 1.6 per cent in the South West and 1.4 per cent in both the East and South East. In London, they were down 1.1 per cent.
In Wales, prices fell even more sharply, by 2.7 per cent, while in Scotland there was a 2.5 per cent rise.
Consumer Prices Index (CPI) inflation figures were also published.
The CPI inflation measure eased to 4.6 per cent in October, down from 6.7 per cent in September, according to the ONS.
Nicky Stevenson, of Fine & Country, said the figures ‘will further boost hopes that interest rates could soon start to drop and entice more buyers.’