Annual house price growth fell to 0.8% in September, the lowest level for more than two years, according to the latest Zoopla House Price Index.
Zoopla said higher mortgage rates are putting buyers in a stronger negotiating position.
The typical UK house price is now £273,000, according to the index. Zoopla expects annual house price growth to weaken further, to around 0.5%, by the end of the year.
Average mortgage rates have risen to 5.2%, the highest level in three years.
The rise has added around £150 a month, or £1,800 a year, to average mortgage repayments compared with the start of 2026, Zoopla said.
House sales agreed over the past four weeks are 9% down compared to a year ago, while the number of homes for sale has risen by 5%.
The West Midlands recorded the largest fall in sales agreed in September, down 15% year-on-year. The East of England was in second place, with a 14% fall.
The Scottish housing market was more resilient, with sales agreed down just 1% and available stock rising 3%.
House prices rose 6.7% in Northern Ireland, 3.6% in the North West and 3.3% in Scotland.
Zoopla executive director Richard Donnell said: “The Middle East conflict has pushed up energy prices and mortgage rates, tempering the autumn rebound in housing activity. Borrowing costs are likely to remain elevated, with house price inflation drifting towards 0.5% by year-end and annual sales expected to be closer to 1.1 million versus 1.2 last year.
“While key measures of housing market activity are lower than last year, there is still plenty of demand for homes. Buyers are simply more cautious and selective about what they view and offer.
“Sellers who factor in local market conditions and seek detailed advice from their local estate agents on how to set the asking price, can still find a buyer relatively quickly.
“Getting the right price from the outset is essential. If you are selling an affordable two or three bed home in the North of England it is a strong market. The most challenging pricing decisions face sellers of flats and larger houses across southern England.”
