House prices rose for the first time in 18 months during December as consumers became more confident.
Property website Hometrack said the average cost of a home in England and Wales edged ahead by 0.1 per cent during the month to average £160,900.
It attributed the increase to sellers pricing their properties more realistically and an improvement in confidence among buyers.
But despite the small over-all rise, the group said prices actually remained unchanged in 84 per cent of the postcode districts it looked at, while they increased in nine per cent of them and fell in six per cent.
Overall, prices have ended the year an average of 1.57 per cent lower than they started it.
Estate agents reported an unseasonal rise in sales during December, with the number of properties changing hands increasing by 3.7 per cent during the month, following a four per cent rise in November.
Despite the rise in activity, the average property now takes 8.1 weeks to sell, compared with 7.5 weeks at the beginning of the year, although sellers are achieving 93.5 per cent of their asking price, up from 92.9 per cent 12 months ago.
Greater London saw the strongest price growth during the month, with the average cost of a property in the capital rising by 0.3 per cent.
At the other end of the scale, house prices fell by 0.2 per cent in the North of England, with all other regions reporting either a 0.1 per cent rise or no change at all.
John Wriglesworth, economist with Hometrack, said prices in the West Midlands had been "flat."
Richard Donnell, director of research at Hometrack, said: "After the very weak start to the year, the pick-up in market activity over the second half of 2005 has clearly acted as a support to average prices, aided by declining levels of stock available for sale.
"However, it is clear that buyers remain highly price-and quality-sensitive. Whilst activity levels may have improved over the autumn of 2005 on the back of more real-istic pricing, it does not automatically follow that prices will start to rise.
"Affordability constraints remain the biggest barrier to house price growth in the short term and we expect average prices to rise by just one per cent over 2006."
The news comes as experts say the market looks to be more buoyant for landlords.
Paragon Mortgages says that despite being a year of widespread negative sentiment on the housing market, 2005 was another strong year for the buy-to-let market.
Conditions in the first half of the year were challenging, with falling confidence in the housing market as a consequence of increased interest rates and general concerns over value and affordability.
The second half of the year however, saw improving landlord confidence.
John Heron, managing director, said : "We're clearly now in a more buoyant phase for landlords. The market has proved more resilient than many expected, and we are definitely seeing a buy-to-let bounce.
"This is, to a significant extent, the result of lower financing costs following interest rate reductions earlier in the year.
"This has enabled investors to borrow at very competitive prices, either on a fixed or variable rate basis, feeding through into the recent resurgence of activity."
Heightened public concern about the growing pension crisis has had a positive effect on the buy-to-let market.
According to a recent RICS lettings market survey, landlords are holding onto their properties for the long term.