House prices will fall by a further 10 per cent next year and 70,000 people will lose their homes, a property website predicted today.
Hometrack said the average cost of a home has fallen by around 9 per cent during 2008, and it expects further drops of 10 per cent in 2009 and 3 per cent in 2010.
But it added that while prices looked set to fall by 22 per cent from peak to trough, for homeowners, who tend to base the peak on what they think they could have put their home on the market for in 2007, the fall would feel more like 30 per cent.
The group said the projected drop in house prices during 2009 would put affordability, in terms of average debt servicing costs, on a par with the lows seen in the early 1990s.
Richard Donnell, Hometrack's director of research, said: "The housing market saw a total reversal of fortunes in 2008 as homeowners faced a crisis of confidence after a decade of buoyant market conditions.
"The onset of the credit crunch acted as a catalyst for both volumes and prices, but structural factors have and will continue to play an important part in shaping the current downturn."
The group expects the property market to remain very subdued during 2009, with just 685,000 homes changing hands during the year, 12 per cent less than this year, which itself saw a 45 per cent drop in sales volumes.
It said turnover as a proportion of housing supply would reach a record low next year, with sales levels falling to the equivalent of the average household moving only once every 31 years - double the average of people moving every 15 years during the past decade.
It also forecasts that 70,000 people will have their home repossessed next year, slightly below the Council of Mortgage Lenders' forecast of 75,000 repossessions, both of which are only marginally lower than the 1991 record of 75,500.
But Hometrack is slightly more upbeat about mortgage lending, expecting net lending of £15 billion during 2009, compared with the CML's estimate of minus £25bn - meaning homeowners would repay more than they borrowed during the year.
Hometrack said it expected house prices for one and two-bedroom homes to see above-average price falls, as these properties tend to be bought by first-time buyers, who have been hit hardest by the credit crunch, while the price of these properties has also been distorted by buy-to-let investors.
But the group cautioned that predicting house price falls was extremely difficult in the current economic climate.
The Council of Mortgage Lenders has abandoned its house price forecast this year, while Nationwide is delaying doing one because of the current uncertainties and Halifax is not doing one because of its takeover by Lloyds TSB.
Mr Donnell said: "The onset of recession and rising unemployment is set to act as a major constraint on demand, compounding the level of price falls in the near term.
"Given the rapidly changing outlook for the economy, no-one can accurately predict how much property prices will fall in the short to medium term."
Meanwhile, property website Zoopla.co.uk said the average UK house price had fallen by £22,083 or 9.72 per cent since the beginning of the year.
The falls have been steepest in Hertfordshire, where prices have fallen by an average of £31,280, followed by Essex at £29,377 and Middlesex at £28,978.
Alex Chesterman, chief executive of Zoopla.co.uk, said: "This year will be remembered as the year that marked the acceleration of the housing market correction.
"Values have been declining every month for the past 18 months and with further job losses predicted, increased repossessions and the continued decline in the number of people buying and selling properties, the bottom is not yet in sight."Reuse content