UK house prices will fall by 4.5 per cent this year, according to a leading think tank.
The National Institute of Social and Economic Research says prices will then continue to fall by 1.5 per cent per year until 2015.
It claims prices rose during the 2000s because first-time buyers were able to get onto the property market. Mortgages were easier to come by as the deposits required were lower.
The research is backed up by the latest figures from the Land Registry, which reveal house prices in England and Wales are on the decline again.
The average property price fell by 1.1 per cent in March to £160,996. This means prices were 2.3 per cent lower than at the same time last year.
Meanwhile, figures from the Council of Mortgage Lenders suggest the mortgage market is recovering with the amount lent in March up 21 per cent on February.
Chief economist Bob Pannell says: 'The housing market has emerged hesitantly from hibernation. Household finances are under a lot of pressure, and as a result demand for house purchase loans fell in the first three months of 2011. Lenders expect mortgage credit availability to improve this quarter, and this should help to underpin house purchase activity albeit at pretty low levels.'