Yet the data revealed vast discrepancies between different regions, with prices continuing to rise in London.
While the average cost of a house in England and Wales stayed at around £160,000 in December, the typical price of a home in the capital jumped by 0.8 per cent to £345,298.
Compared to December 2010, prices in London have climbed by 2.8 per cent, the Land Registry said.
In every other region in England and Wales, prices fell compared to one year earlier. In the south east excluding London, prices were slightly down, losing 0.2 per cent, to an average price of £206,522.
Overall, despite being offset by price hikes in the capital, the cost of a home dipped by 1.3 per cent over the twelve months.
Peter Rollings of estate agent Marsh & Parsons said that demand remains strong in London. “While the underlying lack of properties coming onto the market may stop activity in the capital from rocketing up, the appetite we’ve seen from buyers in January bodes well for vendors in the coming year,” Rollings said.
“Strong interest from international investors and domestic cash buyers, combined with a limited supply of prime property, has helped property in the capital defy the national trend of house price falls,” he added.