House prices fell by an average 8.7 per cent in 2008 and have a further 12 per cent to fall next year, according to property information firm Hometrack.
Properties in London, East Anglia and the South East have been hit hardest this year, according to its survey of more than 1,800 estate agents and surveyors across the UK.
There were some signs that the housing market could be edging towards a bottom with a 0.9 per cent monthly decline in December, compared to a 1.1 per cent fall in November.
But the firm’s research director Richard Donnell warned of further price falls to come as rising jobless totals force more sellers into the market.
“The onset of recession and the prospect of rising unemployment over 2009 will continue to dampen confidence and in turn demand which will inevitably lead to further house price falls over the next 12 months,” he said.
The biggest price fall this year was in London – down 10.1 per cent. Homes in the capital and the South East are in short supply but demand has fallen away from previously high levels, the firm said. In the North East prices have fallen to a lesser extent – down 6.5 per cent – followed by 6.6 per cent average drops in Yorkshire and Humberside.
Many homeowners simply chose not to sell, as shown by a 45 per cent drop in sales volumes this year. With mortgage lending also set to remain tight as banks struggle, Hometrack predicts housing turnover will equate to the average household moving once every 31 years – double the average of the last decade.
In December it took on average twice as long to sell a property than the peak of the housing boom in April 2007.