The peak to trough fall of house prices could hit 22% next year, according to housing and mortgage researcher Hometrack.
The firm says prices could fall an extra 10% next year with a further 3% decline to follow in 2010.
Additionally Hometrack says the projected decline in 2009 will put affordability on a par with the lows seen in the early 1990s.
The volume of open market transactions across Great Britain is also set to fall, it says, by a further 12% to 685,000, following a 45% decline in sales volumes over 2008.
Net mortgage lending growth is forecast to reach £15bn in 2009, down from £39bn in 2008 and a peak of £107bn in 2007, while repossessions are expected to reach 70,000, up from 45,000 in 2008 and close to the record 1991 level of 75,500.
Gary Styles, director of strategy, risk and economics at Hometrack, says the speed of recovery in the mortgage market in the medium term will in part depend on how quickly the major lenders can adjust their balance sheets for the new economic climate.
He adds it will also depend on whether "one or two major players" can take on the mantle as market leader and drive the market to higher volumes.
"The short-term risks are heavily on the downside in both volume and price terms as the full extent of the economic slowdown and rising unemployment hits demand levels," he says.
"However, it would be easy to underestimate the positive impact of the lower exchange rate, the near zero Bank base rate and the full extent of any fiscal injection."IFAonline
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