House prices predicted to fall a further 10% in 2009

England and Wales is half way through the housing market correction, with prices set to fall by a further 10% in 2009, a property website predicted today.

Rightmove said average asking prices in England and Wales had now fallen by 10.2% or £24,692 from their peak in May, and it expects sellers to drop their prices by a further 10% next year.

But it added that while asking prices had fallen by 10%, feedback from estate agents suggested actual sale prices had dropped by 25% from their peak.

The group expects the market to bottom out during the second half of next year, although it thinks prices will "bump along" at the bottom for at least a year.

Miles Shipside, commercial director of Rightmove, said: "On the basis that prices actually being achieved have fallen by a quarter, we predict that overall prices are now within 10% of bottoming out."

But he added that although the recent rapid decline in prices was likely to tempt mortgage-ready customers back into the market, this would not herald a price recovery.

He warned that the housing market in areas where major employers or predominant industry sectors collapsed would face long-term challenges similar to those seen in the former mining communities.

He added that there were local markets that differed significantly from the average so far, with some sought after properties holding all of their gains in extreme exceptions, while in other areas oversupply had depressed prices by as much as 50% for their peak.

Rightmove's prediction came as it reported that asking prices had fallen by a further 2.3% during the four weeks to December 6, knocking £4,829 off the average price to £217,808.

The latest fall follows one of 2.9% during the previous four week period.

Mr Shipside said the recent price declines had created a "window of opportunity" for buyers in some areas who were able to proceed with purchases.

He added that despite recent initiatives to keep people in their homes, 2009 was likely to be the "year of the property deal", with desirable properties available at "exceptionally attractive prices" for people able to go ahead with a purchase.

But overall, the group is only expecting just over 600,000 properties to change hands during 2009, broadly equivalent to the historic annual demand from first-time buyers alone.

However, it does expect volumes to begin recovering by the middle of 2009.

Meanwhile, property website Globrix said around 4,138 properties in the UK had had their asking prices cut during the week to December 12, with sellers shaving off an average of 7.1% or £18,004.

The number of people cutting their prices was up by more than 25% compared with the previous week.

Eight of the 10 towns that saw the steepest price cuts were in Kent, suggesting homeowners in the county have come to realise that they were marketing their homes at unrealistic prices.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Rightmove expects house prices to fall by a further 10% in 2009 as the market bottoms out in the second half of the year.

"This is more optimistic than our view. We forecast house prices to fall by a further 15% in 2009 and then by a further 5% in the first half of 2010 before stabilising."