Past performance is not usually a reliable indicator of the future direction of any asset. But, in the case of property, the price declines of 2008, averaging about 12 per cent, are forecast to be repeated or even exceeded in 2009.

The peak-to-trough fall from the market's dizzy height in 2007 is predicted to be 22 per cent (Hometrack, the property information site), 25 per cent (the Royal Institution of Chartered Surveyors and Savills, the estate agent) or even 35 per cent (the perennially gloomy Capital Economics).

The last is even more pessimistic about the prospects for new-build homes, which may be destined to decline by as much as 45 per cent from their peak.

But then this is the market's most embattled sector, affected not only by consumer indifference (new-build apartments are often poky) but also by oversupply, especially in city centres. There may be as much as £4 billion of unsold new-build stock.

There is likely to be little new housebuilding this year, thanks to the lack of finance for projects. As few as 110,000 homes were built last year - the lowest number since 1924 - and in 2009 the figure could be as low as 80,000, according to the RICS. This is less than a third of the Government's target for new homes.

The Homes and Communities Agency, which came into being on December 1, is charged with ensuring that these targets are met, with the accompanying aim of shoring up the housebuilding industry. But the resources at this quango's disposal appear insufficient to do so.

You may now be tempted to avert your eyes from yet more new year doom-mongering. But here is a crumb of comfort: there may be some improvement in the market's sentiment by the end of the year, as bargain-hunters become enthralled by discount opportunities.

This should give a boost to flagging transaction numbers - good news for the trades, such as homewares retailers, that rely on households relocating.

Sales of properties have slowed to fewer than one a week at estate agents, although there is a brisk trade in auction deals; such purchases do not appear in any of the closely watched house price indices.

The downturn in prices will be accompanied by an increase in mortgage borrowers falling behind with their repayments and seeking help to save themselves from becoming yet another repossession statistic. A total of 75,000 households may lose their homes this year.

Adam Sampson, chief executive of Shelter, says that the charity expects another rise of at least 5-7 per cent in the numbers asking for its help.

No commentator correctly forecast the extent of the market's decline in 2008, probably because nobody could guess at the depth of the catastrophe that would hit the banks after their reckless conduct in the boom days.

Embarrassment at this behaviour could explain why mortgage lenders have been chary about predicting market movements for the year ahead. You may have thought that you missed the 2009 forecasts from Halifax and Nationwide, but you didn't. Neither is expressing a view.

The almost universal expectation that all banks and building societies will continue to be extremely cautious about lending in the months ahead is one reason why Simon Rubinson, chief economist at the RICS, says that prices seem bound to tumble by another 10 per cent (also the outlook according to Rightmove, the property website).

The Council of Mortgage Lenders may have been shy about making a forecast for prices in 2009 but it does expect that new net mortgage lending could fall below zero, with more people opting to repay their borrowings - so reducing their debts - than take out new loans.

Sir James Crosby, the ex-HBOS chief employed by the Treasury to investigate the mortgage market's predicament, is of the same opinion. He would like the Treasury to guarantee mortgage lending, so stimulating the housing market. But if Alistair Darling is keen on this idea, he is certainly in no hurry to implement the scheme. He may say something in the Budget, but not before.

A return to frugality would mark a radical change in the spendthrift habits that some had thought engrained in the British.

In 2007, when many homeowners were treating their fast-appreciating properties as cash machines, withdrawing money to pay for holidays and trips to the shopping mall, new net mortgage lending hit £108 billion.

In 2008, it is estimated to have halved to about £55 billion. New Bank of England figures indicate that homeowners paid off a record £5.7 billion of their mortgages in the three months to September. The retrenchment has already begun, as more people fear the loss of their jobs.

Mortgage borrowers who are coming to the end of fixed-rate deals taken out in the days of bargain-basement home loans will be wondering which lender they dare to approach for a remortgage. HSBC is the most likely candidate to start competing for this business: its home loan offers are topping the mortgage best buys, suggesting its willingness to consider applications, but only from the creditworthy.

Melanie Bien, director of Savills Private Finance, the independent mortgage broker, says: “Only lenders with strong balance sheets will have the cash available to offer significant levels of borrowing, with smaller and specialist lenders unable to compete.

“Interest rates will remain at historically low levels. But while the best mortgage deals will be available to those with large deposits or levels of equity in their homes - 25 or 40 per cent - lenders will start to return to higher loan-to-values [LTVs].”

She continues: “Although we are unlikely to see a return to 100 per cent lending, without higher LTV deals there will be a lack of first-time buyers, making it impossible for the housing market to get moving again once the bottom is reached.

"We could even see a return of mortgage indemnity guarantee insurance - whereby lenders can insure the top slice of lending, say 75 to 90 per cent - with a policy funded by the borrower.”

STILL GOING DOWN

Forecast change in house prices across the UK:

London - 12.2%

South East - 9.6%

South West - 8.4%

Yorkshire - 10.5%

East - 11.6%

West Midlands - 9.6%

East Midlands - 9.4%

North West - 10.1%

North - 5.9%

Scotland-4.6%

Wales - 13.8%

Northern Ireland - 31.6%

UK - 11.0%

Source: Knight Frank

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