Forecast of 2% fall follows similar prediction from RICS

More than 70% of the country saw house prices fall this year and will continue to slump in 2011, according to a survey by market analyst Hometrack.

House prices fell by an average of 1.6% over the past 12 months, as a lack of mortgages and too many homes on the market hit residential developers hard.

Hometrack forecasts a 2% drop next year, arguing that “weak demand and falling supply [of houses] will be the defining features of the market”. The survey added that there would be no growth for “the foreseeable future”.

The first half of 2010 was relatively strong, with prices up 1.3%. However, June marked the start of a sharp decline and the last seven months saw a 2.3% fall.

The gloomy news continued, with the average selling time now 10 weeks – the longest period since April 2009 and up from 9.6 weeks in October. In the East Midlands, North West and Wales the situation is even darker, with average sale times now three months.

However, there are some good signs for property owners and developers in London and the South-east, with house prices this month higher than they were at the start of the year.