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EDITIONS
 Tuesday, 31 December, 2002, 12:44 GMT
Housing market to slow in 2003
A couple looking in an estate agents window
Are house prices out of reach for first time buyers?
Runaway house prices were the story of 2002 - rising by nearly a third.

But most experts expect house price increases to slow to between 5% and 10% during 2003.

Some are even predicting house price falls in London, particularly for the most expensive properties.

In other parts of the country, price growth is expected to continue as the north/south gap in property values narrows slightly.

A shortage of first-time buyers - put off by high prices - and a slowing economy are expected to contribute to a cooling of the market as a whole.

Open in new window : UK property market
The house price boom

Capital economics has given the direst warning about prospects for the housing market.

It has predicted that prices will fall by 20% during the next four years because property has become overvalued during the recent boom.

John Wriglesworth
John Wriglesworth: London prices are falling
But most housing market economists are less downcast.

John Wriglesworth, economist for property website Hometrack, told BBC News Online that he expected property prices across the UK to rise by 4% during 2003.

Some areas of the UK, that had not experienced substantial price growth in recent years, would start to play catch-up during 2003, Mr Wriglesworth added.

However, prospects in London are less rosy. Mr Wriglesworth predicts a price fall of 5% in 2003 citing bonus cuts and job losses in the City.

But even such a drop will not wipe out the gains of 2002.

North/south convergence

Martin Ellis, chief economist at Halifax, the UK's largest mortgage lender is more upbeat.

"We expect house price inflation to slow to 9% with a narrowing in the north/south divide as prices rise more quickly outside southern England."

Mr Ellis added that the increases in recent years had priced many first-time buyers out of the property market.

"The difficulties that increasing numbers of first-time buyers are facing getting a foot on the housing ladder will curb demand, causing house price growth to slow," he said.

Halifax expects prices to edge up by just 2% in London, with growth of below 5% in South East, South West and East Anglia.

However, many parts of the North and Scotland can expect double-digit growth


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