House price rises set to slow

House prices in London will grow more slowly this year than anywhere else in the country, a survey by one of Britain's leading building societies claims today.

Falling pay rises - particularly lower bonuses and poorer job prospects in the City - are among the main reasons for the slowdown, the Nationwide Building Society is to announce.

The slowdown will spill over to the surrounding commuter belt, resulting in a sharp reduction in house price growth there as well.

The rest of the South-East should see price rises decline "less markedly", the Nationwide predicts.

House buyers are also finding themselves " more stretched" in London, now that the average mortgage payer is having to pay £200,000 for a property.

Although incomes are on average 82 per cent higher than at the end of the Eighties, prices are on average 70 per cent above their Eighties peak and experts say they do not believe there is room for rapid growth.

After several years of house price forecasts which turned out to be wide of the mark, the Nationwide is hedging its bets.

This year it is predicting a wide range of national house prices rises, between three and eight per cent, which, it says, will depend on the performance of the economy.