House prices in East Sussex suffered one of the biggest drops in the country during July as rising interest rates took their toll on the market.

Properties in East Sussex have so far fallen by 0.7 per cent, compared with the national average of 0.1 per cent.

Latest figures from web site Hometrack said the average price of a house in England and Wales slipped by £200 to £152,300 during the month as buyers took heed of the rising cost of borrowing and warnings from the Bank of England.

The group said it had reduced its forecast for growth during 2004 to just 5 per cent, from 8 per cent at the beginning of the year.

Prices have so far risen by only 3.6 per cent since January.

John Wriglesworth, Hometrack's housing economist, said: "Rising interest rates and speculative fears of a housing market crash has resulted in falls in house prices across many parts of the country."

The largest falls were mainly recorded in the South-East and Central Midlands, whereas counties on the outskirts of the country have maintained their upwards momentum.

"We anticipate that a ripple of negative price changes will spread out over wider regions of the UK, as the full effect of the most recent interest rate rises have not yet fed through to the market."

The biggest house price falls were seen in central London and the City, where the cost of property dropped by 0.8 per cent, followed by Northumberland, South West London and East Sussex with falls of 0.7 per cent.

Overall 16 counties recorded price falls while the cost of property remained unchanged in 17 counties and rose in 24 counties.

Monday July 26, 2004