Property Prices to Fall Next Year as First-Timers Retreat

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Byline: MIRA BAR-HILLEL

HOUSE prices in London will fall next year but there will not be a crash, according to a report today.

Analysis by Your Mortgage magazine concludes that increases over the next five years will be at no more than the rate of inflation and prices in 2009 will be, on average, just 6.6 per cent higher than today.

The magazine predicts prices will rise by about two per cent by the New Year but there will be a fall of three per cent next year and a virtual standstill during 2007. It then predicts moderate increases of 4.6 per cent in 2008 and 3.1 per cent in 2009.

The fastest growth is predicted for inner boroughs.

The worst performers are expected to be outer boroughs on the eastern fringe, with overall price falls forecast for Barking & Dagenham and Havering.

The figures are based on population trends and forecasts for income, employment, interest rates and housing stock as well as past prices from the Land Registry.

But a sharper reduction in prices is predicted by other analysts. Ed Stansfield of Capital Economics maintains that a fall of up to 20 per cent is on the way.

He said: "Confidence remains very fragile and overvaluation is now taking its toll, with fewer and fewer buyers now able or willing to meet asking prices. …