"Until the economy and the labour market stabilise, it is hard to imagine households becoming upbeat about the immediate future for house prices and this will hinder the pace of recovery," she said.
"In addition, the wider economic recession also impacts negatively on household expectations of future incomes."
The Royal Institution of Chartered Surveyors, (Rics) added to its voice to the calls for government action to reinvigorate mortgage lending.
"I think to secure an improvement in transaction activity what we will need to see is some measures taken to increase the supply of mortgage finance," said Simon Rubinsohn, the Rics chief economist.
The biggest fall in house prices last year was in Northern Ireland where prices dropped by 34.2%, partly reversing the huge house price boom seen in the previous few years.
In Scotland however, prices were much more resilient, falling by only 8.1%.
Elsewhere in England and Wales the drop in prices was more uniform, ranging from 11% in Northern England to 16.6% in East Anglia.
Prices are still highest in London where they average £257,963.
"The ongoing deep problems of the housing market maintains pressure on the Bank of England to deliver another deep interest rate cut on Thursday," said Howard Archer, chief economist at IHS Global Insight.
"Although mortgage lenders are likely to be increasingly unwilling to pass on much of any further interest rate cuts," he added.
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