In May house prices experienced the sharpest drop since November 2011 as the property market was plagued by uncertainty surrounding the EU referendum.
Property values fell by 0.4 per cent in May in England and Wales - the lowest home sales in May for five years - according to data from Your Move and Reeds Rains estate agents.
London house prices were down by 0.3 per cent - or £1,769 - month-on-month; but prices in Slough bucked the trend, soaring by 23.3 per cent year-on-year.
The news comes a day after experts predicted that house prices would fall over the next quarter. The drop follows a surge of buying earlier in the year as buy to let landlords tried to avoid paying the government's hike on stamp duty, which came in at the beginning of April.
Adrian Gill, director of Your Move and Reeds Rains estate agents, said: "The housing market is holding its breath ahead of the EU referendum and after a rapid sprint at the start of the year.
"In London, house prices have slipped from last month's record high. This has pushed average property values in the capital back under the £600,000 mark, with the value of a typical home in the city falling to £598,421."
Buyers in London may well feel sceptical about what constitutes a "typical home in the city", however, as it recently became clear just how misleading the figure for the London average house price really is.