UK house prices are potentially set to fall by 6% over the next 2 years according to Capital Economics bringing an end the recent property boom experienced over the past 9 years.
The report has suggested that UK property prices are likely to fall by 3% in 2008 and 3% in 2009.
Last week, the Halifax announced the first fall in house prices this year.
UK property prices are expected to follow Spain, France, Ireland and the United States by suffering from the end of the global housing boom.
Ed Stansfield who wrote the report, said that affordability has worsened over the past 2 years, and that problems in the credit market would make it more difficult for people to remortgage.
The report outlined that monthly repayments on a new mortgage for a typical homeowner were 16% higher than two years ago.
The recent credit crisis means that mortgages would become more expensive, particularly for people with less equity.
Lenders are increasingly differentiating between lower and higher-risk borrowers in terms of the mortgage rates on offer," it said.
This may prove grim reading to home owners and property investors.
However a house price correction may not be a bad thing in the long run.
If house prices do fall as predicted, some of the heat will be brought out of the market bringing property price growth back to more realistic and sustainable levels.
Property investors and home owners are going to have to be much more realistic about the value of their homes and property investments in the current market and avoid borrowing to much to move up the property ladder or when buying new property investments.