The recovery of the housing market is unlikely to start before 2010, Nationwide building society's chief executive has warned.

Graham Beale told the BBC that house prices could fall as far as 25% from their peak before the housing market starts to recover.

He said: "I think next year we're going to see a similar pattern to what's happened this year. I think it will be stable but we're going to see further falls in house prices and I think we're going to be into 2010 before we get to the new world, whatever that is."

His predictions suggest that the Government's announcement on stamp duty last week would do little to reverse the current downturn.

He argued that the lack of liquidity was not the problem but the change in lenders' attitude to risk. He also said the impact of US credit conditions on the UK mortgage market was not felt in all quarters.

Mr Beale said: "If you're a borrower and you've got a good credit record and you've got a deposit there's massive choice of product. Liquidity is not an issue."

"A lot of lenders that were more aggressive in their lending activity have closed the business in terms of new lending so that's where the void is in the marketplace," he said.

Borrowers with impaired credit histories were among those who suffered as a result, he said.

Building societies were doing well out of the credit crunch he added, receiving record inflows over the past 15 or 16 months as people saw them as "safe and comfortable".

Nationwide took £1 in every £5 invested in the UK last year and 1.5 million new accounts were opened, he said.

The Government announced last week it would increase the level at which stamp duty kicks in from £125,000 to £175,000 for one year.

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(Nationwide building society)