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The chief executive of Nationwide Building Society, Graham Beale, is predicting that house prices will continue to fall during 2008/09 and possibly into 2010.

Mr Beale is expecting a peak to trough decline of 25%, after which improved affordability ratios will encourage first-time buyers back into the market.

The comments came as the UK’s largest building society reported that its net new mortgage lending had fallen by over two-thirds.

In the six months to the end of September, Nationwide’s lending for new mortgages amounted to £1 billion, compared with £3.6 billion a year earlier.