Property owners in the Home Counties are bearing the brunt of the housing slump as sellers cut asking prices on nearly a third of homes.
Sellers have reduced asking prices on a quarter of homes across the country since the beginning of September to attract interest in the face of falling demand, which is down 44pc on last year.
One in 10 properties have been reduced in price by at least 5pc, according to the property website Zoopla.
Asking price reductions have been most prevalent in southern England because of bigger sales falls. In the South East and East, almost a third of homes have had prices cut.
Sales are down 28pc across the country compared with this time last year, Zoopla said. In more expensive parts of the South, East Midlands and Wales, new sales have plummeted by as much as 50pc.
The drop was less steep in more affordable areas such as Scotland and the North East.
Average house prices are still rising slowly but are expected to fall in the first half of next year, the property website said.
Prices have risen by 7.8pc in the past year - the lowest rise since February 2020.
Sales are forecast to fall by 300,000 next year, with prices down by up to 5pc.
The average price achieved in recent weeks was 3pc below advertised, and experts warned discounts are expected to become more prevalent in 2023.
Richard Donnell, of Zoopla, said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double digit house price falls at a UK level remains low.”
He said the outlook for house prices was weak but he expected that people would continue to buy to escape high rents, because of their retirement plans and to change jobs.
More homes are coming on to the market for sale, with supply up 40pc on last year. However, this is still 20pc below pre-pandemic levels.
The number of sales transactions is now back to pre-pandemic levels, erasing the boom during the last two years.
Mortgage rates spiked following the mini-Budget in September, with the average two-year fixed deal climbing from 4.74pc to 6.65pc between September 23 and October 20, according to Moneyfacts, an analyst.
Since Jeremy Hunt replaced Kwasi Kwarteng as Chancellor and intervened to calm markets, mortgage rates have edged down. The average five-year fixed deal fell below 6pc last week.
Rates are expected to drop closer to 5pc at the beginning of next year, according to Zoopla.