House prices fall 3.4% in year
House prices fell by 3.4% during 2010 after sliding by 1.3% in December alone, Halifax has said.
The average cost of a home ended the year at £162,435 as buyers continued to stay away from the market, according to Halifax.
Annual house price inflation - which compares average prices during the three months to the end of December with the same period a year earlier - was running at minus 1.6%, its lowest level since November 2009. But a straight year-on-year comparison showed that prices were 3.4% lower during December than they had been at the end of 2009.
Martin Ellis, Halifax housing economist, said: "Looking forward, we expect limited movement in house prices during 2011 but with the risks on the downside.
"Current signs that homeowners are becoming more reluctant to sell would, if continued, help reverse the imbalance between buyers and sellers. Nonetheless, uncertainty about the economy, weak earnings growth and higher taxes could put some downward pressure on demand."
He added that, while prices across the whole of the UK were likely to remain broadly unchanged, there would be some "modest" regional variations, particularly in areas which were likely to be impacted by Government spending cuts.
The group pointed out that prices had fallen by only 0.9% during the three months to the end of December, compared with the previous quarter, well down on the quarterly falls of 5%-6% seen during the second half of 2008.
It said interest rates were also likely to remain low for some time, which would help to support affordability for people entering the market, while it would reduce the number of people who were forced to sell their home because they could not keep up with the mortgage.
The Halifax figures contrast with statistics reported by Nationwide, which showed that house prices edged ahead by 0.4% during 2010, after also rising by 0.4% in December.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The 1.3% drop in house prices in December and overall decline of 0.9% quarter-on-quarter in the fourth quarter of 2010 reported by the Halifax is fully consistent with our view that house prices will trend down gradually overall to lose around 10% from their peak 2010 levels by the end of 2011. Current mounting speculation that the Bank of England could be forced into an early raising of interest rates by rising consumer price inflation adds to the downward pressure on house prices."