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Last Updated:  Thursday, 20 February, 2003, 21:55 GMT
Housing boom 'coming to an end'
Fresh evidence has emerged that the UK housing market might be past its peak.

After a year of sharp rises, prices in London and south-east England have fallen for the first time since November 2001, a report by the Royal Institution of Chartered Surveyors has said.

And chartered surveyors are expecting UK-wide house prices to fall over the next three months, as concerns over the economy and war on Iraq spread from the South East throughout the country.

Predictions of a market slowdown appear to have been correct
Ian Perry, RICS
The report comes the week after Bank of England governor-designate Mervyn King said house price growth would probably slow to zero over the next two years.

There is also growing concern among economists about high levels of consumer debt.

Consumer indebtedness

Over the past year, a growing north-south house market divide has emerged but this could start to narrow, the report indicated.

We will see stagnation followed by sharp falls
Professor Andrew Oswald

Average mortgage payments are still very affordable
Ray Boulger, Charcol

Several recent reports from housing market analyst Hometrack have revealed how house price inflation has been to slow in parts of the capital and the South East.

While other parts of the UK have continued to see prices rise, this scenario may be changing, Thursday's RICS report indicated.

Areas such as south-west England, the Midlands and East Anglia, which had experienced high house price inflation during the second half of 2002, saw prices stagnate in January.

RICS said while prices across northern England and Wales continued to soar, markets there would slow later in 2003.

Iraq effect

Across the UK, 76% of surveyors reported that they had seen an increase in the number of properties being put up for sale in January.

This could increase supply in the market and depress prices.

RICS housing spokesman, Ian Perry, said: "Predictions of a market slowdown appear to have been correct, as the effects of the slowdown ripple out from London."

Mr Perry added the surprise decision by the Bank of England to cut interest rates earlier this month would not counteract "the negative impact of another war in Iraq or the general feeling of economic uncertainty".

Interest rates are, at 3.75%, at their lowest level since 1955.



The BBC's Rory Cellan-Jones
"Estate agents noticed some time ago that shifting 4 million homes was getting trickier"

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