The average discount to asking price has hit a four-year high according to Zoopla.
The portal’s latest House Price Index shows the typical discount at 4.2 per cent - the largest since 2019.
The biggest discounts are in London and the South East averaging 4.8 per cent.
Buyer demand is up 12 per cent since the summer but remains a third lower than a year ago.
The overall stock of homes for sale is up 18 per cent on the five-year average. However, new supply is down six per cent and sales agreed have plummeted 19 per cent.
The portal says the typical UK house prices has fallen 0.5 per cent over the past 12 months to £265,100.
Richard Donnell, executive director at Zoopla, tells investors: “The housing market continues to adjust to a higher mortgage rate environment. Better news on inflation and the end of base rate increases has provided scope for lenders to start reducing mortgage rates which has supported a modest uptick in demand for homes this September.
“Buyers continue to remain cautious and many are waiting for better value for money and improved affordability from lower house prices or further falls in mortgage rates before returning to the market.
“House price falls have been modest with the average house still 17% more expensive than before the start of the pandemic. Forbearance by lenders, tougher mortgage regulations over recent years and a strong labour market appear to have moderated the stress in the market compared to previous cycles that would have driven larger price reductions.
“House prices will continue to drift lower, especially in southern England, ending the year 2-3% lower meaning falling mortgage rates are required to boost activity and attract buyers back into the market.”