House prices drop in December amid uncertain outlook for 2012

House prices fell 0.9% in December and are 1.3% down on the same period last year, according to new figures from Halifax.

This means the average house price is now £160,063.

House prices also dropped 0.1% in the three months to December, compared to a 0.1% rise in second and third quarters of 2011.

The figures reflect a very mixed picture during 2011, said Halifax, with six monthly falls, five increases and one month in which prices remained unchanged.

Martin Ellis, housing economist, said: ‘Whilst there was a modest fall overall in prices during 2011 with an annual decline of 1.3% in December, house prices held up well last year in the face of the difficult and deteriorating economic climate and substantial pressure on households' finances’.

‘If the UK can avoid recession, we expect broad stability in house prices in 2012. There is, however, considerable uncertainty regarding the prospects for the UK economy which will, to a large extent, depend on how events in the eurozone unfold'.

'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’,' he added.