Property: Experts agree that housing markets will continue to be shaky and uncertain in 1999

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ON ONE thing all property pundits are agreed. There is a nervousness in the market which will see business in the New Year start with a whimper rather than a bang. The cause of this caution is harder to pin down.

One thing is clear, people's perception of what they can afford is more closely tied to economic forecasts than interest rates. While borrowing looks as attractive as it does, this would seem a good moment to brave the property market, but according to FPDSavills Research, we are saving more and choosing to spend more on leisure activities.

Consumer confidence (low at present) and job security (shaky in a number of areas) have more bearing on house-price rises than how cheap money is. Savills forecast that prices in the mainstream will rise by 4 per cent over the coming 12 months while prime central London will fall by 5 per cent, explained by the uncertain financial sector and an overall increase in supply. They do not expect the investment demand to pick up until yields rise above 9 per cent again.

Robin Paterson, group managing director of Hamptons International, believes that prices in many areas of London have yet to "bottom out". Outside the capital with its equally fragmented picture he says that prices still need to fall in some areas by as much as 10 per cent.

At the same time, good quality homes in prime locations will do better towards the end of the year. Country houses may well rise by 5 per cent from Spring.

At Knight Frank, they do not expect buyers to pay over the odds for less than outstanding houses, as they did last year.

However, some show real optimism. At John D Wood, Peter Young does not expect the wariness to last for long. "Whatever the cloud, whether the Gulf War or a gloomy economic forecast, people hesitate for a while and then get back to business as usual."

But perhaps the candid summary of Bidwells, property consultants, is the one that most closely reflects how many people feel. "The prospects for the property industry over the next 12 months have never been more difficult to read. It does seem probable that the top of the performance cycle has been reached but with the fundamentals for the market remaining sound, the landing is likely to be soft."