Monthly figures from the Council of Mortgage Lenders (CML) found that gross mortgage lending was around £14.6billion in November, down 22 per cent on October and 51 per cent lower than November 2007.

A decline in lending between October and November is normal, the CML said, but this is a much larger fall than usual, reflecting the continued problems in the markets and falling economic confidence.

The CML has issued its end of year forecasts for the property market moving into 2009, but warns that these predictions cannot be seen as a precise assessment due to the ongoing challenges in the market, and more action from the Government will be needed to improve conditions, according to CML director general Michael Coogan.

“In looking ahead to the coming year, the housing market will remain extremely subdued and net mortgage lending is likely to turn negative.” he said.

“Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers.

“Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful, but more will be needed. 2009 will be a challenging year, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates.”

Meanwhile, the National Association of Estate Agents (NAEA) monthly market report has revealed that house prices continued their downward spiral in November, falling on average almost £5,000 from £190,284 in October to £185,960.

Chris Brown, president of the NAEA, explained that “November, and indeed December, is always a quiet time for the housing market because people are reluctant to move home over the festive period.” and, he added, “after what has been the most difficult year for the market in a very long time, these figures are definitely not as bad as expected.”

But despite the gloomy figures, there are also glimmers of hope for the market, as for the third month in a row there was an increase in the percentage of first time buyers who are in the market for a property, now accounting for 10.4 per cent.

And Mr Brown forecasts further improvements in the market as the effect of the Bank of England’s base rate cuts trickle down to consumers. “The market is still waiting to feel the impact of recent interest rate cuts, and if the major lenders commit to making mortgages available to those who want to buy then the market should improve next year.” he predicts.

“The demand for property is there – so in 2009 we need political will, professional integrity and financial commitments.”

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