House prices declined over 16% in 2009

A drop in value in December of 2.2% brought the average cost of a home down to just under £160,000.

Prices dropped by over 16% in 2008 - the largest drop since the lender began records in 1983 - and follows news that securing a mortgage is increasingly difficult.

The Bank of England has released figures showing that the number of mortgage approvals in November last year fell to a nine-year low of 27,000.

"Continuing pressures on incomes and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are expected to exert future downward pressure on the market over the coming months," said Halifax chief economist Martin Ellis.

Mr Ellis went on to add that he expects house prices to fall an extra 15% in 2009, bad news for any small businesses owners who use their house as a main financial asset.

"This bodes ill for business activity, investment, employment, consumer spending and housing market activity," said Howard Archer of IHS Global Insight.