Rise in property prices 'will slow to 6% a year'

The housing market is likely to become stable in the next two years, ending 18 months of rollercoaster activity, a leading industry body is predicting.

The housing market is likely to become stable in the next two years, ending 18 months of rollercoaster activity, a leading industry body is predicting.

The price of a home will rise, on average, by 6 per cent in 2001 and 2002, after a mini-boom in the summer that saw annual inflation peak at almost 20 per cent.

The Royal Institution of Chartered Surveyors will say today that the market is entering a "settled period". Since the market peaked, fewer people have been able to buy for the first time and prices have fallen. "First-time buyers ... had been the key drivers in forcing prices up," it will say.

Since inflation is forecast to remain between 2 and 2.5 per cent, annual price rises of 6 per cent mean homeowners will enjoy "continued moderate growth". Ian Perry, the institution's housing spokesman, said: "The market continues to stabilise. This can only be good news for everyone, especially those first-time buyers who have been put off from buying by the fluctuations of the last 12 months."

Its November house-price survey shows that the market in England and Wales enjoyed its strongest growth for six months. The number of surveyors reporting rising prices outnumbered those reporting falls by 22 points, compared with 7 points in October.

The Council of Mortgage Lenders has predicted rises of 6 per cent next year and 5 per cent in 2002 and 2003. Michael Coogan, its director general, said: "The stable outlook for the economy is helping to remove the old boom-and-bust cycle."