Despite the adverse economic climate, positive factors such as the low interest rates offered in the market as well as the promise of safer mortgage lending rules from FSA contributed to house prices rising by a modest 1% in 2011, according to Nationwide, with London prices surpassing the 5% mark.

In reality, the 1% increase in house prices is overshadowed by annual inflation and this is expected to remain true for 2012.

But what will happen to property prices in 2012?

The uncertain economic situation in the EU means that house price changes will be difficult to predict and many property market experts and forecasters have different opinions on how 2012 will play out.

Both Halifax and Nationwide predict a mostly stagnant market with stability in house prices.

Halifax’s housing economist, Martin Ellis, commented: “Overall, we expect continuing broad stability in house prices nationally during 2012. Prices are again likely to end the year at levels close to where they began with the market continuing to lack any real direction.”

Nationwide’s chief economist Robert Gardner commented: “2012 isn’t shaping up to be much better than 2011, for the UK economy or the housing market.”

Other predictions have been less optimistic for the coming year with several property market experts forecasting a moderate decline in house prices.

IHS Global Insight, Capital Economics as well as estate agent Knight Frank all predict no less than a 5% dip in house prices during 2012.

IHS Global Insight economist Howard Archer commented: “House prices will fall by around 5% overall from current levels by mid-2012 as weak economic fundamentals outweigh extended low interest rates.”

While Knight Frank said: “Our view is that conditions in the UK mainstream market over the next few years will resemble our “slow correction” scenario, under which the market will experience an extended period of low transaction numbers and price falls in real terms.”

Moreover, a few experts predict dramatic declines in house prices, with some experts forecasting declines of 10% or more.

Jonathan Davis of Jonathan Davis Wealth Management has made the grimmest prediction for the UK house market in 2012: “Fall of 7 to 12%. This year will be down a couple or a few per cent but, in real terms, it will be down around 8%. Not insignificant at all.”

However, a few house market forecasters are predicting a rise in property prices for 2012. Rightmove’s experts predict their house price index to turn a 2% increase over the next year.