House prices fell for the fifth consecutive month as buyers grappled with rising borrowing costs.

The average cost of a property dropped by 4.7pc in the year to September, according to the Halifax house price index, having declined by 4.5pc in the year to August.

The decline comes despite the Bank of England holding interest rates steady last month at 5.25pc and means a typical home is worth £278,601, a drop of around £1,200 since last month.

Prices fell 0.4pc in September, marking the sixth consecutive monthly decline. 

Halifax Mortgages director Kim Kinnaird said: “Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales. 

“Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability. 

“Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.”

It comes as figures from Nationwide earlier this week indicated that house prices dropped for the eighth month in a row in the year to September, declining to 5.3pc.

However, it said that prices were unchanged compared to August.

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