The average value of homes on the market fell 1.7% to £302,023 this month, in the largest pre-Christmas drop since 2012, according to property website Rightmove.

And annual listed prices fell 0.2%, marking the first decline in seven years.

The largest listed falls were in the south and were among the highest value homes.

In London, asking prices for new homes on the market fell by an average of 1.7%, or £10,793, and in the South East prices tumbled by an average of 2.1%, translating to £8,647.

Miles Shipside, Rightmove director and housing market analyst, said: “New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual.

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“Stretched buyer affordability and the cooling markets in the south and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism.

“This is a welcome effort by sellers to minimise the usual pre-Christmas market slowdown.

“Some new-to-the-market sellers and their agents have acted early to try to improve the buying mood and avoid the traditional ‘buyer humbug’ dislike of Christmas housing activity.”

However, rising wages and the low supply of new homes means the underlying fundamentals for the property market are in place, he added.

Richard Freshwater, director of Cheffins estate agents in Cambridge, said: “The key with price reductions is to drop the price by enough to bring in a new set of buyers within a new bracket.

“The mistake often made by sellers is to reduce the price on consecutive occasions, which can have a damaging effect and put buyers off.

“It is much more sensible to significantly reduce to a rounded figure and then bring in higher levels of interest, hopefully to generate competition between buyers.”