Property prices in Sussex will rise steadily in the next five years, according to an authoritative new forecast.

House prices in some parts of the region may experience small falls until the end of 2004.

But by 2008, property values in all of Sussex's 13 local authority areas will have risen.

With an average increase of 17.2 per cent forecast across Sussex, the new figures contradict the so-called boom and doom merchants.

These either predict much larger increases or a collapse in the housing market.

The projections are based on statistics including Land Registry records, interest rate predictions and Government figures, including employment rates.

They foresee the largest rises in Horsham, which is predicted to have 20.2 per cent growth, while Arun, Chichester, Crawley, Lewes, Mid Sussex and Wealden are all predicted to enjoy growth of more than 18 per cent.

Hastings and Adur have the lowest growth forecasts at 11.5 per cent and 12.8 per cent respectively.

Your mortgage editor-in-chief Andrew Stuart said: "There may be some price falls in the short term as rising interest rates start to feed through and buyers refuse to pay the prices sellers currently expect to make.

"But we believe small falls will take the heat out of the market and encourage solid if unspectacular growth over the following four years."

The new figures come amid widely differing predictions for the housing market.

Investment manager Tony Dye, who predicted the last stock market crash, foresees an imminent collapse in UK house prices, with an overall reduction of 30 per cent by 2009.

Former Bank of England adviser Roger Bootle, of Capital Economics, estimates prices will fall 20 per cent in the South-East by the end of 2007.

But mortgage lender Nationwide predicts house prices across the UK will rise 17 per cent this year alone.

Property web site Rightmove has claimed house prices in the South-East have increased by 1.9 per cent in the last month and now average £226,632 - £14,687 more than in April last year.

Rightmove director Miles Shipside said: "In 2004, all parts of the country are firing on all cylinders."

Rightmove financial adviser Martin Cunningham added: "The figures are borne out by a number of other sources and it's very bad news indeed for first-time buyers.

"The percentage of first-time buyers in the market is now 16 per cent, compared with about 20 per cent last year.

"This all reminds me of the lead-up to the property crash in the early Nineties and I hope we don't see a repeat of those bad times."

Figures from the Halifax published last month showed that even in the county's cheapest town, St Leonards, the average first-time buyer would have to borrow almost four times his or her salary to secure a home.

In the most expensive area, Pulborough, average buyers would have to borrow more than eight times their salary.

Lenders are usually prepared to offer a maximum mortgage equivalent to 3.5 times a single salary or 2.75 times the combined salary for a couple.

Your Mortgage commissioned Prophit, a data analysis organisation, to predict what could happen to average prices in the next five years.

Prophit has taken a range of economic data from a number of sources and constructed a powerful computer programme.

Key information includes gross domestic product, inflation forecasts and interest rates from a range of City analysts.

Demographics, including regional and national population trends and shifts, are included, along with employment forecasts and current and projected individual income levels and expectations.

Wednesday April 21, 2004