House prices 'to fall in next four years'

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House prices in some parts of the country will fall by up to 7 per cent by the end of 2009, new research to be published next week will warn. An independent report prepared for Your Mortgage magazine, due to be revealed on Wednesday, will predict price falls in large areas of the country, of between 1 and 7 per cent, between this year and December 2009.

The report will say that the South-west of England is likely to be hit hardest by house price falls. It will also predict falls in much of central England, including Buckinghamshire, Leicestershire and Northamptonshire, as well as Shropshire and Gloucestershire.

Researchers expect London, the North-west and the North-east to buck the trend and record house price increases. Homeowners in inner London and York are set to be the biggest winners.

"Overall, the forecast is projecting a cooling down in the housing market over the next few years when compared with the massive house price inflation of the past few years, which was clearly unsustainable," said Your Mortgage editor-in-chief Andrew Stuart.

The report will follow warnings from Halifax Bank and Nationwide Building Society that the housing market has slowed in recent months. Analysts had hoped expectations of interest rate cuts from the Bank of England would buoy the market.