House price slump fears

House prices in the West Midlands could slump next year despite the cut in interest rates it was predicted today.

Prices in the region could be down by between 10 and 15 per cent on mid-2007 asking prices, according to the County Homesearch Company, the largest independent network of homefinders in the UK.

But high quality and "particularly desirable" homes will hold their value, with the property hotspots in Solihull and North Warwickshire remaining popular with those relocating for business, and South Shropshire continuing to find favour with people retiring.

Paul Castle, local director of County Homesearch in the West Midlands, said: "While I would expect to see an increase in supply in the new year, limited demand will undoubtedly drive a drop in prices.

"However, while the housing market in 2008 looks set for a slow start, a substantial cut in interest rates could turn this round.

"Demand for top-end detached family homes with large gardens, particularly those situated on the outskirts of a village, remains undeterred, a trend that I am confident will continue into 2008."

Any recovery in the property market next year could hinge on further interest rate cuts on the back of yesterday's quarter per cent reduction by the Bank of England's Monetary Policy Committee.

But recent figures have confirmed the property market is not immune to rising interest rates.

Figures from the UK's biggest mortgage lender Halifax this week showed that house prices fell for the third month in a row during November, dropping by 1.1 per cent.

It marked the first time that prices had fallen for three consecutive months since early 1995. The number of mortgages approved for people buying a home fell to a record low during October.