Our views on valuation, as well as our expectations that the economy and housing market activity levels will remain weak, mean that we anticipate further falls in house prices. But the fact that interest rates are likely to be kept on hold may mean that the pace of adjustment is relatively slow. We think that house prices will fall by 5% this year and by 7% in 2012. Even then, housing would remain overvalued, so we have pencilled in a further 5% decline in 2013.
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