UK property values fell by 0.3% in December, while headline values fell by 4.2% for 2012 as a whole, according to IPD UK's monthly index.

Low investor confidence, weak occupier demand and ongoing uncertainty around the future of the eurozone economies were responsible for tumbling values, according to IPD.

Total returns remained positive, at 2.4%, supported by income returns of 6.8% for the full year.

The gap between London and the rest of the country continued to widen in 2012. Standard retail values in central London increased by 6.8% in 2012, while regional retail values outside the South East declined by 9.9%. City office values rose by 1.4% over the year, while offices outside London and the South East saw a decline of 10.4%

Phil Tily, managing director of IPD, said: "The polarisation between London and the rest of the UK has led to considerable interest in the fate of the secondary and regional markets, where discounted values have pushed initial yields to in excess of 8% in some sectors.

"A key question for 2013 will be whether parts of the secondary market, with potential for active management, see more interest as investors shy away from expensive prime London, or whether further economic shocks and slow domestic growth continue to push investors to low risk assets."