The market will be "subdued" this year, Britain's biggest mortgage lender has said.
House prices will fall by nine per cent over 2008, HBOS has predicted.
According to the firm, which is the biggest mortgage lender in the UK, the property market will remain "flat" and "subdued" across the year, due to the continuing effects of the credit crunch. The comments came as part of a trading update, which was made by HBOS as it launched its new £4 billion rights issue, through which it hopes to boost revenue by selling new shares.
While house price falls might help some first time buyers get on the property ladder who would not have been able to afford to before, it is more likely that it will make purchasing a home more difficult for many.
This is because the apparently weakening UK property market has resulted in many mortgage lenders tighten their credit criteria and withdrawing many home loans products from the market: a trend that looks set to continue with further price falls.
Speaking to Reuters, HBOS chief executive Andy Hornby expressed confidence that the new shares sale from the firm would be a success. "We're underwritten and this rights issue is going ahead. It's as simple as that. We are not for turning," he said.
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