"Our view that house prices will ultimately fall by 35 percent -- or a further 25 percent from today's prices -- still holds," a report from research group Capital Economics said, The Daily Mail reported.
The report said the British economy would contract 1 percent in 2009 and 0.5 percent in 2010, which would accelerate the housing "correction."
"With the economy heading for a recession lasting for at least two years, we now think that those falls could be seen by late 2009 or early 2010 -- a year earlier than our previous forecast," the report said.
The government said Friday the country's economic output shrank 0.5 percent in the third quarter, leading many economist to conclude a recession had already begun in Britain.
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