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A December poll has shown a complete loss of confidence in the property market as just one in five believes that average house prices will increase in 2008.

The poll said that three-quarters of the respondents expected property prices to fall in the next 12 months, and just over half thought that prices would drop by over 10%. With the current average home worth £194,895, by Halifax’s figures, that would knock nearly £20,000 off the price. In the poll, for website This Is Money, just under 20% expected house prices to rise in 2008, and 6% reckoned they would be unchanged.

A similar poll 12 months ago showed that one in three people thought prices would increase by 6% or more in 2007, with 55% believing prices would go up in the year.

The bad news throughout 2007 - further interest rate rises, sub-prime crisis, credit crunch, Northern Rock, stagnating house prices - has caused confidence in the housing market to plummet.

During 2007, house prices rose to record levels, with the Halifax average house price reaching £199,600 in August before dropping back to £194,895 in November. The November index from the bank shows an annual rise of 6.3%, down from 8.9% in October. According to Nationwide the average house price in November was £184,099, with an inflation rate of 6.9%.

Forecasts from the Royal Institution of Chartered Surveyors also suggest that house prices will struggle in 2008. House prices will hardly change throughout the year, but as they fail to rise, first-time buyers will begin to enter the market to help buoy prices.

Simon Rubinsohn, RICS chief economist, said: “2008 will prove a difficult year for the housing market, but with falls likely in the base rate, the housing market should be provided with a stable platform. The effect of the credit crunch will dissipate slowly meaning that those seeking to obtain finance in the first half of 2008 may struggle. However, the employment picture should remain firm throughout the year, helping to prevent significant numbers of repossessions and the subsequent influx of supply into the market. This should ensure that house price growth remains broadly flat over the course of the year.