"Our forecast – that ultimately house prices will collapse by 35% or another 25% from current levels – remains in force," writes the agency Capital Economics. "However, in light of the fact that the country's economy will enter a recession that will last at least two years, we assume that the price decline will be observed in late 2009 or early 2010 – that is, a year earlier than our original forecast."
According to Capital Economics analysts, in 2009 the UK economy will shrink by 1%, in 2010 by 0.5%. The number of unemployed will increase by about 1.5 million people. "We expect a sharp drop in inflation, which will allow interest rates to fall to 2.5% or lower in 2009, and may prevent an even larger decline in house prices," the experts say. The deepening economic recession is likely to mean an acceleration in the rate of house price decline, writes the portal Prian.ru citing the Daily Mail newspaper.