The most prominent proponent of an imminent house price crash, Capital Economics, has abandoned its forecast of sharp price falls and adopted a more benign view. Capital had forecast that prices would drop by 20% over a three year period, but are now expecting a decline of “5% or so over the next two years” and expect a stagnant market going forward. A statement from Capital said: “As things stand, there would appear to be a growing chance that the adjustment to lower valuations will come about largely via a period of broad nominal price stagnation, allowing both real house prices and the HPE (House Price to Earnings Ratio) to decline gradually over a prolonged period.”