Blue chip shares fell following Chancellor Philip Hammond's Autumn Statement, which promised to ban letting agents from charging fees to tenants.
The FTSE 100 Index fell 37.1 points to 6782.7 in afternoon trading, after reports of the move hit a number of estate agents and property firms. The FTSE 250 Index was 62 points lower at 17617.1.
"News of a ban on charging fees to tenants comes as a hammer blow to embattled estate agents," said Neil Wilson, markets analyst at ETX Capital.
Estate agents Countywide and property firm Berkeley were two of the worst performers in the second tier, falling 11p to 193.7p and 83p to 2461p respectively.
Housebuilders in the top flight were knocked by the negative sentiment in the sector with Persimmon down 44p to 1734, and Barratt Developments 9p lower at 477.5p.
In afternoon trading the biggest risers in the FTSE 100 Index were Bunzl (+38p to 2044p), Wolseley (+85p to 4706p), Compass Group (+23p to 1349p), 3i Group (+9p to 664.5p) and Provident Financial (+38p to 2972p).
The biggest fallers in the FTSE 100 Index were Antofagasta (-22p to 680p), Royal Bank of Scotland (-6.1p to 201.7p), Fresnillo (-35p to 1247p), Tesco (-6p to 212.8p) and Persimmon (-44p to 1734p).
In afternoon trading the biggest risers in the FTSE 250 Index were Thomas Cook Group (+4.7p to 78.3p), Entertainment One (+11.2p to 225.7p), Daejan Holdings (+240p to 5850p), Rotork (+9.5p to 236.1p) and Evraz (+10p to 272.7p).
The biggest fallers in the FTSE 250 Index were Countywide (+11p to 193.7p), CMC Markets (-8.2p to 195p), Hochschild Mining (-8.6p to 214p), Berkeley (-83p to 2461p) and Sports Direct International (-10.1p to 305p).