House prices have recorded their biggest annual decline since October 2009, according to Halifax.
Prices dropped 1.4% in April, representing a 3.7% annual fall - the biggest slump in 18 months, according to data from the lender.
The average UK house price is now £160,395, 1.5% lower than the December 2010 average.
Commenting on the figures, Martin Ellis, housing economist at Halifax, says the data shows the underlying trend is one of "modest decline".
"Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices," he says.
However, Ellis points to signs of encouraging housing market conditions.
Typical mortgage payments for a first time borrower are only 29% of disposable income in the first three months of 2011, down from 48% three years ago.
In addition, recent mortgage approval figures from the Bank of England show completed house sales rose by 2% between February and March. These factors, according to Ellis, are "curbing the pace of decline".
He concludes: "There are signs that house sales are stabilising albeit at a level lower than the historical average."
Paul Hunt, managing director of financial IT company Phoebus Software, believes falling house prices isn't necessarily a disaster for many borrowers.
"Dropping prices will give more weight to the argument to keep the bank rate low and it now seems likely that we won't see a rise until later this year. That's great news for those repaying mortgages and for people looking to remortgage as the price of fixed rate deals has started to decline too. This will reduce the pressure on homeowners with tight finances to sell and is an indication that transactions remain subdued."
He adds: "Until lending recovers, we won't see significant price gains in the property market, but at least the affordability of mortgages allows many homeowners to ride out the falling market."