All the indicators now point to a slowing market ' estate agents are seeing fewer enquiries from prospective buyers, mortgage lending for purchases is slowing and more surveyors are reporting price falls, than price rises.

Analysts are not expecting the market to crash but homeowners are being warned not to expect the value of their property to rise significantly over the next few years. The most bullish forecast is for 3 per cent growth next year, but many commentators expect prices to remain flat ' Nationwide building society is forecasting zero growth as is the Royal Institution of Chartered Surveyors (Rics) and Capital Economics, a consultancy, thinks prices will fall by an average of 3 per cent. However, the national average will mask huge variations in the strength of the market is different parts of the country. We look at what the experts think will happen at a regional level.

London
House prices in the capital have been one of the main drivers for growth this year and most analysts expect it to remain one of the strongest areas. Estate agency Savills thinks prices will rise by an average of 5 per cent in 2008. While higher than the national average, the London market will be significantly weaker in 2008 than 2007.

The credit crunch is expected to have a significant impact on London house prices. A record ??8.8 billion was paid in City bonuses last year and an estimated ??5.5 billion of that was invested in property. However, the Centre for Economics and Business Research has predicted that bonuses will fall by 16 per cent to ??7.4billion this year. It also warns that 6,500 jobs in the City could be lost. Savills believes a knock-on affect from this will be a sharp drop in the amount of money City workers plough into the property market next year. As demand softens, price growth will slow.

Nationwide is forecasting 1 per cent growth in London house prices next year. However, Fionnuala Earley, chief economist at the building society added that there are significant factors, which will help underpin the market in the capital. She said: 'The supportive factors for London prices are severe supply shortages, the positive economic impact of Olympic spending, and a likely continuation of demand for prime central London properties from overseas buyers, particularly those from oil-producing and emerging market economies.'

South East
The property market in many parts of the South East is driven by the same factors which influence house prices in London, and, as such, it boasts some of the country's most expensive homes.

At the top end, demand comes from wealthy homeowners who work in London, but want to live outside of the capital. While prices at the bottom end of the market have been pushed higher than the national average by people who cannot afford to live in London and seek more for their money in the surrounding areas. As a result, the commuter belt is spreading further and further out.

As with the capital, analysts expect the South East to be one of the most resilient regions during the market slowdown. Savills is forecasting annual growth of 4.5 per cent, while Hometrack, a property website, thinks prices will rise by an average of 1.5 per cent in the South East next year. Hometrack's national forecast is for just 1 per cent growth in 2008.

Scotland
Nationwide believes Scotland will be the strongest performing region next year and it is forecasting price rises of 4 per cent in 2008. Savills also thinks prices in Scotland will rise by 4 per cent next year and Hometrack is forecasting price rises of 3 per cent.

The reason for this is that affordability is least stretched north of the border so the impact of this year's interest rate rises should be less marked. Ms Earley said: 'Scotland has not participated as strongly in past house price boom cycles, and this probably makes it somewhat less vulnerable to weaker conditions in the UK market as a whole.'

The average house price in Scotland is ??141,158, compared with the national average of ??198,898, according to Halifax. There are areas of Scotland, where house prices are much higher than the average, notable parts of Edinburgh where the values of some properties are not dissimilar to prices in the South East.

Northern Ireland
Opinion seems divided as to the prospects for the housing market in Northern Ireland. Prices there have almost doubled in the last two years, and having been well below the national average for years, the current average is ??221,004, according to Halifax.

Hometrack thinks the market in Northern Ireland will continue to be strong in 2008 ' it is forecasting price growth of 3 per cent. However, Nationwide is expecting it to be the weakest part of the country. It is warning that prices will fall by an average of 5 per cent.

Ms Earley said: 'Northern Ireland has become the least affordable region for first time buyers. This is due mostly to the phenomenal house price growth that the Province has seen over the past couple of years. At the end of September, prices were up by more than 40 per cent year-on-year, while earnings growth remained in the low single digits. At this stage there has been some overshoot of house prices, and we expect some falls next year.'

Demand has all but dried up according to Rics' latest survey. Aiden Conway at Patrick Andrews Chartered Surveyors in Londonderry reported that demand in the lower price bands has virtually disappeared. And Bronagh Boyd at Digney Boyd estate agency in Newry, County Down, said: 'There is no demand at present and we are advising clients to let their properties for the next six months if possible. Even if we reduce the prices there is no demand, so we are trying to keep prices reasonable.'

South West
Savills is forecasting price rise of around 3 per cent in the south west, but Nationwide thinks prices in this region will fall by 1 per cent.

The South West has been popular with second homeowners over the last few years and many locals feel they have been priced out of the market. However, demand from would-be second homeowners is expected to subside as a result of the financial crisis and higher interest rates.

Some estate agents are already experiencing a slowdown. Robin Thomas at Strutt & Parker, said: 'The October market was quiet with viewings down. Vendors need to adjust prices to achieve sales.'

West Midlands
The West Midlands has been one of the weaker areas this year, with prices having risen by 4.7 per cent in the 12-months to the end of September, according to Halifax. The market is expected to remain soft next year, with Hometrack forecasting rises of 1 per cent and Nationwide expecting prices to be flat ' some estate agents are already seeing the market weaken further. John Stevenson at John German estate agents in Burton-on-Trent, Staffordshire, said: 'The market is getting flatter and flatter.'

However, as with all regions, some areas will do better than others and in order to get the 0 per cent growth that Nationwide is forecasting, prices will rise in some parts and fall in others.

Prices are already falling in some parts of the West Midlands ' an oversupply of new build flats in the centre of Birmingham means that some owners are being forced to sell for far less than they paid a few years ago and this is likely to continue. At the other end of the spectrum, prices in Stratford Upon Avon and Leamington Spa have been rising very strongly this year, they were up 27 per cent and 20 per cent respectively in the year to September. Growth will probably be slower in 2008, but prices will more than likely continue rising.

East Midlands
Nationwide is forecasting zero growth in house prices in East Midlands as well, which means prices in some areas will fall while others see small increases.

Most at risk of price reductions are new build flats. Like in Birmingham, there have been a huge number of one and two-bedroom apartment built in places such as Nottingham. Many of these have been bought by landlords who are struggling to find tenants due to a glut of supply. As a result, they are being forced to sell and some are already facing significant losses.

In other parts of the region, estate agents are reporting a slow market. Mark Newton at Newton & Fallowell in Grantham said: 'It has gone very quiet. New applicants and viewing are at their lowest level all year and the viewers that are about are offering at least 10 per cent below asking price. We've got a tough time ahead.'

East Anglia
The market in East Anglia could be more buoyant than that in the midlands, with Savills forecasting price rises of 3 per cent next year. Some parts of the region benefit from demand from London commuters, which should help underpin prices, but as you get further away from the capital things are likely to be quieter. Hometrack and Nationwide thinks weakness in these areas will pull the annual rate of growth down to 0 per cent next year.

North
Homeowners are warned to expect price falls of up to 2 per cent next year. Both Hometrack and Nationwide expect prices in Yorkshire & Humberside and the north east to fall in 2008. Savills also expects the market to be weak although it thinks slight rises of about 0.5 per cent could be achieved ' this will still be lower than inflation, so in real terms prices will be lower.

Paul Airey at Paul Airey Chartered Surveyors in Sunderland, Tyne & Wear, said that market there has frozen and the only vendors achieving sales are those who are prepared to reduce their asking price. However, in Harrogate the market is much stronger, thanks to demand from buyers looking to move into the area.

Tim Robinson at Knight Frank in Harrogate, said: 'Sales continue to be strong and we are seeing plenty of good new stock coming to the market.'

North West
Average house prices are also set to fall in the North West next year, with Nationwide forecasting falls of 2 per cent. New build flats in some areas of Manchester and Liverpool could fall by more, while the prices of properties at the upper end of the market in parts of Cheshire and the Lake District should prove more resilient.

Generally, supply shortages tend to be less of a problem in the north so if demand weakens it will have more of an impact ' in areas where there is a shortage of property up for sale, prices can remain largely unaffected even if the number of buyer enquiries fall.

Wales
Having risen very strongly in 2006 and the first half of 2007, house price growth in Wales has already started to slow in many areas. Savills is forecasting a slight increase of 1 per cent next year, but Nationwide thinks values will slip back slightly.

Estate agents said that many buyers seem to be waiting to see if interest rates fall next yeast. Kelvin Francis at Kelvin Francis & Co in Cardiff, said: 'Plenty of viewings are taking place but most buyers are holding back before making offers to see what happens to interest rates. If the Bank of England cuts rates, that will reassure many. There is a wish to buy, but at the moment buyers expect reductions and vendors will not give them.'

Written by Clare Francis

Image courtesy of Aunt Belly