London house prices likely to slow next year

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The housing market in London will run out of steam next year, an economic think-tank has predicted.

House price inflation in the capital would fall from 12.9 per cent this year to 2.8 per cent in 2002 ­ its lowest level since 1995 ­ said the Centre of Economics and Business Research. The predictions are in line with forecasts by Nationwide and Halifax that the UK housing market will cool next year as the recession spreads. The CEBR said London was more exposed to world economic slowdown than other areas of Britain.

London's housing market was likely to suffer most from job cuts in the financial sector, reduced bonuses, and a fall in the number of executives being posted here from abroad. The centre added that while London was usually a property hotspot, prices were likely to increase at less than the national average of between 5 per cent to 10 per cent in the coming year.

Research by the information group Experian showed that during the past year central London had the lowest proportion of house sales out of all big towns and cities in England and Wales, which it said could be due to high prices.