Nationwide reports biggest annual drop ever, with the average UK price falling £29,000 in a year

House prices plummeted 15.9% last year, the biggest annual drop on record, according to the latest survey from the Nationwide building society.

Today’s figures show that UK prices fell by 2.5% in December alone, the 14th consecutive monthly drop, taking the average house price down to £153,048.

The average property is now worth £29,000 less than a year ago and 18% less than it was at the peak of the boom in October 2007.

Fionnuala Earley, chief economist at the Nationwide, said 2008 was a “year of turmoil” and the speed of house price falls has defied expectations.

“The disruption in the financial markets worsened throughout 2008 and had larger implications for the real economy than we anticipated a year ago,” she said.

Earley said prices are expected to carry on falling as mortgage approvals and public confidence continue to plunge.

She said: "Until the economy and the labour market stabilise, it is hard to imagine households becoming upbeat about the immediate future for house prices and this will hinder the pace of recovery."

A report from the Halifax last week similarly reported that house prices dropped by 16% in 2008.