House prices to rise for next five years

London house prices will defy both the doom and the boom merchants by rising slowly and steadily in the next five years, an authoritative new forecast reveals today.

Some parts of London may see small falls by the end of 2004 - but over five years, all London's boroughs will see some price rises. The projections are based on statistics including Land Registry records, interest rate predictions and government figures, including employment rates.

They foresee the biggest rises in areas which have recently had relatively low increases. Richmond leads with 23.2 per cent growth while Hammersmith and Fulham, Kensington and Chelsea, and Wandsworth are all predicted to enjoy around 20 per cent growth.

Havering, and Barking and Dagenham have the lowest growth forecasts:

7.7 per cent and 9 per cent respectively. Other boroughs, such as Newham, which have benefited from buy-to-let, are expected to experience slow growth because of a shortage in tenants.

Your Mortgage editor-in-chief Andrew Stuart said: "There may be some price falls in the short term as rising interest rates start to feed through and buyers refuse to pay the prices sellers currently expect to make. But we believe small falls will take the heat out of the market and encourage solid if unspectacular growth over the following four years."

The figures come as widely differing futures have been predicted for the housing market. Investment manager Tony Dye - dubbed Dr Doom - who predicted the last stock market crash, foresees an imminent collapse in UK house prices, with an overall reduction of 30 per cent by 2009.

Former Bank of England adviser Roger Bootle, of Capital Economics, said: "We estimate prices will fall 20 per cent in the South-East by the end of 2007."

But price monitor Hometrack, which bases its information on estate agents' figures, estimates an overall price increase in London of 30 per cent by

2008. And Nationwide predicts house prices across the UK will rise 17 per cent this year alone.