Skip to content

UK property prices saw steep decline in 2008

The figures published today by Nationwide, the UK's biggest building society, show that the average house price fell 2.5% in December and dashing hopes that the 0.4% fall in November was a sign of the price slide slowing.

December's 2.5% drop was the largest since Nationwide began compiling figures in 1991 and an indication that real estate market conditions are worsening rapidly despite the Bank of England slashing official interest rates to just 2%.

Nationwide expects the price fall to continue in 2009. 'We do not expect house prices to turn around very quickly. We expect further falls in the short term,' said Fionnuala Earley, Nationwide's chief economist.

She said the rate of decline was falling overall. 'But that is not to say that we think that the market is turning around. A change in affordability is needed to get the market back on track. Buyers need to be confident to come back into the market,' she added.

Nationwide recently announced that it would no longer be issuing monthly forecasts and Earley confirmed that this is because the property market will remain volatile in 2009. 'It is more difficult than usual to arrive at a specific forecast for house prices,' she said.

Other experts agree. Howard Archer, chief UK and European economist at IHS Global Insight, is predicting that house prices will fall another 15% in 2009 as people continued to have difficulty in securing mortgages and saving deposits.

Potential property buyers are also reluctant to invest while they believe that prices will come down further and when they are concerned about losing their jobs.