House prices fell 0.9 percent on the month in December, mortgage lender Halifax said on Friday, confounding expectations of a modest pick-up.
House prices fell 1.3 percent in the three months to December versus a year ago, a bigger decline than the 0.8 percent drop forecast by analysts.
The average price of a home stood at 160,063 pounds.
If the UK can avoid recession, we expect broad stability in house prices in 2012, said Halifax housing economist Martin Ellis, adding that Britain's economic prospects largely depended on events in the euro zone.
In addition, the extent to which households choose to reduce their debts will also affect growth. As a result, the outlook for house prices is also uncertain.
(Reporting by Olesya Dmitracova; editing by Keith Weir)