The UK’s largest building society, Nationwide, on Thursday said that it expected UK housing prices to fall further this year, though the percentage decline would “remain within single digits”.

Nationwide’s chief executive, Graham Beale, made the comments as he announced strong financial results for the mutually owned company.

In response to the global credit crunch, Nationwide cut back its mortgage lending and expanded its share of the consumer savings market. The company showed underlying pre-tax profits for the year to April 4 had risen by 17 percent to £781 million.

Net residential lending fell by 40 per cent to £6.7bn, and lending to the commercial property sector was down 29 per cent to £2.4bn. The company said its total net lending of £8.9bn was fully funded by net retail savings receipts of £9.1bn. This compared with 2007 lending of £14.6bn and savings receipts of £3.3bn.

“We experienced strong inflows of savings as customers sought a safe haven for their money following the uncertainty of the credit crunch,” said Mr Beale.

The building society’s cautious approach was illustrated by the fact it had a 19 percent share of the UK savings market, compared to just 7 percent of the residential lending market. In the previous year the company had 11 percent of the mortgage market.

Mr Beale said he would be comfortable if Nationwide retained a 7 percent share of UK mortgages this year.

In the first annual decline for 12 years, Nationwide announced, last month, a 1.1 percent fall in UK house prices. “We think that trend will continue throughout the year, but remaining within single digits,” Mr Beale said

Although builders have reported a further deterioration in th UK housing market, Mr Beale is optimistic, “If anything I think market conditions have improved marginally over the past month,” he said. “We may have seen the first green shoots of recovery.”

Finance Director, Mark Rennison, when asked about the commercial property market, said the commercial sector seems to have been more affected by the credit crunch that residential property.

“We have seen some significant falls in capital values,” Mr Rennison said, “and clearly there is the potential for further falls in value and further pain in the commercial sector.”