London house prices hardest hit

The past year saw the first house price drop in London since 2000

House prices in London fell further than in any other part of Britain in 2008, according to new figures.

A survey of more than 1,800 estate agents across the UK found that London house prices fell by 10.1%, compared with an 8.7% overall slump.

The survey, conducted for property information firm Hometrack, estimated that a further overall price drop of 12% is expected for next year.

The firm warned that job losses will lead to more forced sales in 2009.

The survey did find some hints that the housing market could be edging close to the bottom based on the fact that the price drop for December of 0.9% was less than November's drop of 1.1%.

Recession fallout

But Richard Donnell, research director for Hometrack, said the fallout of recession may not have fully hit the housing market just yet.

"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.

Falling prices and economic insecurity meant that many homeowners chose to stay put, as evidenced by a 45% drop in sales volumes in 2008.

In December it took, on average, twice as long - 12 weeks - to sell a property than at the peak of the housing boom in April 2007.

The proportion of the asking price being achieved has also fallen back to 88.6%, well down on the April 2007 peak of 95.7%.