The housing slump will be over by Christmas, one of London’s most prominent economic consultancies has predicted.

In a forecast that will reassure homeowners, Lombard Street Research has declared that house prices are now affordable, and forecast that the worst of the property crisis is over. Its affordability index, produced in conjunction with The Daily Telegraph, shows that for the first time in five years house prices throughout the UK are better value than their long-term average.

House prices have fallen by a fifth in nominal terms since the housing slide began around 18 months ago, but many economists anticipate that they will drop a further 15-30% in the coming months as more families fall victim to negative equity and unemployment climbs to the highest level since the mid-1980s. However, Lombard Street Research said the combination of falling prices and dropping interest rates meant in fact that prices are now good value for those that can find the finance.

Daily Telegraph