A North-South divide has emerged in the property market as property prices are hit by higher borrowing costs.
As investors bet that interest rates could start to fall in 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 until September.
This was the first annual fall since 2012. A typical house costs £291,000.
The report showed that prices in the North and the Midlands continue to rise while they are falling in the South.
The biggest rise in England was in the North East, where prices rose 1.6 per cent in the 12 months to September.
Property fall: Office for National Statistics figures 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 percent in the southwest and 1.4 percent in both the east and southeast. In London, they fell 1.1 percent.
In Wales, prices fell even more sharply, by 2.7 per cent, while in Scotland there was an increase of 2.5 per cent.
Inflation figures for the Consumer Price Index (CPI) were also published.
The CPI inflation measure fell 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 raise hopes that interest rates may soon start to fall and attract more buyers”.