The property boom is set to continue despite a recent slump in property prices.

Last month property values dropped by 1.9 per cent in Brighton and Hove and 0.7 per cent in East Sussex as a whole, supposedly ending a 12-year boom.

But a new forecast suggests there is no need for homeowners to panic.

Property prices will continue to drop by an average of 1.7 per cent county-wide during the next 12 months but pick up during the next four years, according to research by Your mortgage magazine.

By 2008, the average home in Sussex is predicted to increase in value by 13.5 per cent on today's prices.

While it is good news for homeowners, the price increase is not welcomed by first-time buyers who are already struggling to get mortgages.

The changes will be most noticeable in Brighton and Hove, where homes will lose 2.5 per cent of their value next year but see an overall increase of 14.1 per cent by the end of 2008.

The hottest property will be in Crawley, predicted to increase in value by 14.8 per cent.

East Sussex will see a 12.5 per cent increase with West Sussex faring even better with a 13.8 per cent rise.

Paul Bonett, director of Bonett's estate agency and secretary of Brighton and Hove Estate Agents Association, said: "The predictions of a slump are slightly misleading.

"We are finding properties are selling for roughly the same amount but vendors are asking less than they were before. Where they may have put their home on the market for £350,000 and accepted £330,000 six months ago, we're finding they are putting it up for £335,000 and accepting £330,000.

"It is becoming a more realistic market and I'm confident it will pick up. We are due for an election and people are always cautious before that because there is an element of uncertainty."

But the days of astronomical price increases, which have seen values rocket by an average of 80 per cent in the last five years, are over.

Your Mortgage editor Paula John said: "We are seeing a nationwide slump at the moment, particularly in Brighton, which has been attributed to five increases in interest rates leading to investor caution.

"The figures show things will start to level out after that and confidence should return to the market. Things will pick up, not anywhere near on the scale of recent years, but we will see steady improvement."

The predictions have been calculated by data analysts Prophit and are based on gross domestic product, inflation forecasts, city investment projections, employment and income levels, available housing stock and Land Registry house prices.

Mrs John said: "They are tried and tested methods and have been very accurate in the past."

Thursday August 26, 2004