House prices will continue to fall for another 12 months and will not bounce back to last year's levels until at least 2013, a leading economics group said today.

The value of the average home will fall by 25%, or £50,000, to reach a low of £149,000 in autumn next year, despite the prospect of much lower interest rates, the Centre for Economics and Business Research said. House prices have already tumbled by more than 12% in the past year, according to figures from Halifax, the lender. The CEBR, which has traditionally been bullish about the outlook for the housing market, said that prices may start to rise before Christmas next year, but that by 2012 the average value of a property would still be 3% lower than last year.

Other economists have made even gloomier forecasts for housing. Capital Economics, the consultancy, has said that prices would fall by 35%, peak to trough, although it also forecast a tentative recovery in 2010.

The Times, Financial Times