The housing market faces two years of blight from the impact of the global credit squeeze, with prices falling continuously over much of southern England, a report forecasts today. The Times, Daily Telegraph

Prices are set to fall by as much as 4% in the West Midlands by the end of 2009 and there will also be sharp drops in the East Midlands, the South West and Northern Ireland, according to Experian.

However, London is tipped to buck the trend with a 6% rise, slightly above inflation, the report says.

Andrew Burrell, of Experian’s business strategies division, said that GDP growth would slow to just 2.1% next year, from 3.1% in 2007, with an even more abrupt downturn in consumer demand.

The situation could worsen if market interest rates fail to fall in line with official rates, the report said, because lenders would be forced to cut back on issuing new mortgages, resulting in price falls in all regions.