House prices fell by 2.3 per cent in November, marking the biggest monthly drop since 2008, according to an index.
The annual rate of house price growth slowed to 4.7 per cent, from 8.2 per cent in October, Halifax said.
The average UK house price in November was £285,579.
Kim Kinnaird, director of Halifax Mortgages, said: "The monthly drop of 2.3 per cent is the largest seen since October 2008 and the third consecutive fall.
"While a market slowdown was expected given the known economic headwinds - and following such extensive house price inflation over the last few years (19 per cent growth since March 2020) – this month's fall reflects the worst of the market volatility over recent months.
"Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.
"When thinking about the future for house prices, it is important to remember the context of the last few years, when we witnessed some of the biggest house price increases the market has ever seen.
"Property prices are up more than £12,000 compared with this time last year, and well above pre-pandemic levels (a £46,403 increase compared with March 2020).
"The market may now be going through a process of normalisation. While some important factors like the limited supply of properties for sale will remain, the trajectory of mortgage rates, the robustness of household finances in the face of the rising cost of living, and how the economy – and more specifically the labour market – performs will be key in determining house prices changes in 2023."
Halifax said Wales and the South West of England have recorded particularly sharp slowdowns in annual house price growth.
Both have been key hotspots of house price inflation during the coronavirus pandemic, suggesting that previous drivers of the market such as the "race for space" and heightened demand for rural living are now receding, Halifax said.
The pace of annual property price inflation also slowed in London, which continues to lag the other UK regions and nations.
The average property price in London remains well above the UK average.
Alice Haine, personal finance analyst at Bestinvest, said: "Britain's housing market is succumbing to the wider gloom affecting the economy following the dizzying price rises seen during the pandemic."
Emma Cox, managing director of Shawbrook Bank, said: "The combined effects of double-digit inflation, alongside the UK's slow march into recession is keeping many would-be first-time buyers away from entering the market."
Matthew Thompson, head of sales at London-based estate agent Chestertons, said: "Compared with November 2021, our branches have experienced a 23 per cent uplift in the number of properties being sold; however, there has been a significant downward trend in market appraisals being carried out.
"This suggests that, although buyer sentiment is fairly strong, some sellers are still holding off due to economic uncertainty."
Jeremy Leaf, a north London estate agent, said: "Prices are softening but continue to be supported by low stock and strong employment.
"New business is hard to come by and only slowing returning now lending rates are starting to fall, with buyers factoring in where they expect pricing to be next year."
Tom Bill, head of UK residential research at estate agent Knight Frank, said: "Even as the financial pain becomes less acute in coming months, we expect it to become more widespread as more favourable mortgage offers made before the mini-budget lapse.
"This should take house prices back to where they were in the summer of 2021, erasing around half of the 20% gain they made during the pandemic."
Managing director of Midlands-based estate agent Barrows & Forrester, James Forrester, said: "It's important that we view recent declines in context, as we are now merely starting to see a return back to pre-pandemic norms."
Mark Manning, MD of Northern Estate Agencies Group, which owns Manning Stainton, Ryder & Dutton and Mortimers, said: "Our web stats show us that interest behind the scenes is still there.
"People are still looking at what's coming on and spending time searching for property but are clearly holding back. The question is whether the new year will see that traditional rush to market for both new buyers and sellers."
Iain McKenzie, chief executive of the Guild of Property Professionals, said: "The unprecedented demand we have seen in the last couple of years has meant that estate agents have been scrambling to replenish their stock.
"The cost-of-living crisis will be the determining factor to control house prices in the months ahead."
Jason Tebb, chief executive of property search website OnTheMarket.com, said: "All the upheaval - the macro-economic challenges and the chatter around fixed-rate mortgages, which although edging downwards are higher than we have grown used to - will inevitably impact the confidence of the average property-seeking consumer.
"However, people move for many different reasons and that's not going to change, even if conditions are more challenging."
Here are average house prices and the annual increase, according to Halifax:
- East Midlands, £244,429, 9.5%
- Eastern England, £339,683, 7.3%
- London, £549,160, 5.2%
- North East, £173,587, 10.5%
- North West, £229,218, 9.4%
- Northern Ireland, £185,097, 9.1%
- Scotland, £203,132, 6.5%
- South East, £397,562, 7.6%
- South West, £307,750, 8.4%
- Wales, £220,689, 7.9%
- West Midlands, £253,253, 9.4%
- Yorkshire and the Humber, £207,800, 9.3%