House prices will fall by a further 12 per cent next year, according to Britain's longest-established property website, adding to the gloom for the nation's struggling homeowners.

Propertyfinder.com, which was set up in 1995, yesterday became one of the few experts on the housing market to come up with a firm prediction for the extent of price falls next year. It said that the market, already skewed favourably for buyers, would be dominated by bargain-hunters, including professional buy-to-let investors and first-time buyers. The website also predicted that the property rental market would remain buoyant. Although they will initially fall, rents will begin to go up again by the end of the year, it said.

In spite of its apparently bleak prognosis, based on net mortgage lending to finance purchases reaching £40 billion next year, propertyfinder.com insisted that the worst was over in terms of the level of home sales.

The website said that expectations that the Bank of England would cut interest rates to 1 per cent by the spring should help to fuel better deals for would-be buyers and those looking to remortgage. However, the forecast is unlikely to bring much relief for homeowners, who have seen their properties' value fall by more than a fifth in some areas already.

Halifax, the lender and a leading barometer of the property market, said this month that prices had fallen 18 per cent since the summer of 2007, when the average house price touched £200,000. The average now stands at about £164,000, it said. Neither Halifax nor Nationwide, Britain's largest building society, has been prepared to predict where prices will end 2009, such has been the pace of the fall.

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