UK house prices to fall by 25% by end of 2009

The research house added that house prices are expected to plateau during 2010 before rising by around 20 per cent between 2011 and 2012. However, according to the forecasters, house prices will still be 3 per cent lower in 2012 than they were during their peak in 2007.

The predicted peak-to-trough house price fall of 25 per cent comes despite the fact that the base rate is expected to fall by a whole basis point before Christmas and could be as low as two per cent this time next year.

The forecasts also follow the Government’s recent bail out announcement that is intended to recapitalise the banks and encourage them to ease mortgage lending and availability, suggesting that the plans may not be enough to see the recovery of the housing market any time soon.