The lender’s Consumer Confidence Index fell to 81 points as a result of the weak exchange rate and heightened volatility in the equity markets, while sentiment over employment and the economy also fell, to 79 points; the lowest points since Nationwide began recording data.
The Present Situation Index, detailing how consumers felt about the current economic and employment situation continued to fall, matching consumer trepidation about the current state of the economy.
The research suggested that this was being exacerbated by sentiment that house price growth would slow, and that prices would drop over the next six months.
Martin Gahbauer, senior economist at Nationwide, admitted that the index served as a timely reminder of the problems affecting the market.
He said: “The continued downward trend in consumer confidence in January is not unexpected in light of current uncertainties about the economic outlook.
Sharp falls in share prices, the rising cost of essentials and a weak exchange rate have combined to negatively impact consumer sentiment, which could be a reason for the increased pessimism around the future economic situation.”
However, in its own assessment of the market, Halifax suggested that house prices would remain static for 2008.
Martin Ellis, chief economist at Halifax, said: “Over the past year, the average price of a home in the UK has increased by £7,628 to £197,244. We expect sound economic fundamentals and lower interest rates to support house prices.
"Nationally, we predict that house prices will be flat in 2008.”
