More than a third (35%) of homes across the UK are estimated to be in postcode areas where property values have fallen over the past year, according to Zoopla.
The proportion has increased from 12% a year ago, the property website said.
Price falls were found to be concentrated in London and the South East of England.
Higher mortgage rates have increased the cost of buying, with buyers also being more selective, with the number of homes for sale 7% higher than last year, giving buyers more choice and room to negotiate, Zoopla said.
This is also putting pressure on sellers to price their properties competitively, to attract buyer interest, it added.
Despite a significant number of postcode areas seeing house price falls, the average house price across the UK is still 0.8% higher than a year earlier, at £273,100, Zoopla said.
At a more localised level, 85% of homes in London and the South East were estimated by Zoopla to be in postcode areas with price falls.
There are still areas where home values are rising by more than 3% annually, particularly across the North West and Scotland, Zoopla said.
It said house prices are rising by more than 4% annually in postcode areas in Liverpool, Carlisle and Kilmarnock.
Zoopla’s latest house price index covers the period up to the end of September 2026.
Richard Donnell, executive director at Zoopla, said: “The extra cost of mortgages has made home buyers more selective while greater choice of homes for sale has increased the scope to negotiate on price.
“The impact is being felt by sellers in southern England where house price falls are most concentrated as average prices continue to rise across the rest of the country.
“There is still demand to buy homes, and those that are well priced and presented are selling just as quickly as last year.
“Getting the price right from the start is essential.
“Overpricing significantly reduces the chances of selling, so sellers should seek advice from local agents on buyer demand and the right asking price for their home.”
The Government recently unveiled the Your First Home initiative, which will give first-time buyers the chance to buy a new build property with a 2.5% deposit, with the Government stepping in to lend them an extra 20% towards the cost.
The full details will be outlined in the Budget, including a household income cap and local property price caps, with the aim of ensuring the new support is targeted at those who need it.
The Budget will also include more than £1 billion for social and affordable housing and give England’s mayors and regional leaders greater powers and funding.
With the Budget looming on Wednesday, Mr Donnell said: “The biggest boost the Budget could provide to the housing market would be to create the conditions for lower mortgage rates.
“We expect activity to strengthen once mortgage rates start moving back below 5%.
“Changes to stamp duty could support buyers and sellers, particularly in southern England where transaction costs are highest.
“The Your First Home scheme is positive for the new homes industry and, if designed well, could stimulate demand and support wider housing market activity in 2027.”
Nathan Emerson, chief executive at property professionals’ body Propertymark, said: “The housing market is becoming increasingly localised, with higher mortgage costs putting pressure on affordability, particularly in southern England.
“While increased choice is giving buyers greater scope to negotiate, realistic pricing and informed advice from property professionals remain essential to achieving successful sales.
“Despite regional price falls, demand remains, but buyers are increasingly selective and focused on value.
“Ultimately, market confidence will depend on improved affordability, access to suitable housing and the ability of buyers and sellers to move with confidence.”
Here are average house prices in September, and the annual percentage change, according to Zoopla:
London, £523,100, minus 1.0%
South East, £382,600, minus 0.6%
Eastern England, £337,300, minus 0.5%
South West, £309,600, minus 0.4%
East Midlands, £233,400, 1.0%
Yorkshire and the Humber, £196,600, 1.3%
West Midlands, £239,500, 1.5%
North East, £152,300, 2.4%
Wales, £214,800, 2.0%
Scotland, £177,700, 2.5%
North West, £211,400, 3.2%
Northern Ireland, £200,800, 5.8%