The South East

Lack of supply kept house prices strong, although nervousness about the turmoil in the financial markets took the shine off property. According to the Land Registry, prices rose by an average of 10 per cent in the year to October, pushing the cost of a home in the region up to £230,976. The figure hides more astonishing price rises in commuter towns, which have benefited from the strength of the London market.

Ross Attwood, of John D. Wood in Weybridge, Surrey, says: “We have seen a lot of demand for big houses of between £750,000 and £1million, as families move out of London in search of more space.” Weybridge was hailed as the most expensive town in the South East by the Halifax at the end of the summer. However, the tide turned soon afterwards when the credit crunch started to bite. According to Humberts, asking prices fell by between 5 and 10 per cent over the autumn. John Young, of Humberts, says sales of big new developments of flats closest to London will be the hardest hit, as the appetite for buy-to-let investments dwindles and first-time buyers stay away.

Forecast for 2008

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The market will continue to slow, although the region is expected to fare better than most of the country because of a limited supply of property for sale. Prices are forecast to rise by 4.5 per cent next year, according to Savills, compared with an average of 3per cent around the UK. Compared with the rise of 8 per cent this year, the market will feel sluggish. But Hometrack is predicting a rise of just 1.5 per cent next year and 3.2 per cent over the next three years in the South East.

Homes in places with good links with London and a limited stock will retain value better. Prices are more likely to fall where there is an oversupply of new-build flats and no buy-to-let investors to snap them up. Fortunes are also mixed in classic commuterland. Attwood says that Weybridge will remain popular with first-time buyers from London who can find better value outside the capital. But he expects a fall in demand for multimillion-pound luxury homes and believes that there will be little incentive for local homeowners in the middle of the market to trade up.

The South West

The fortunes of the market in regional hotspots have been closely tied to London's. In the first half of the year, buyers of second homes helped to push up prices to levels previously unheard of in the region. Martyn Rohrs, of Savills in Truro, says: “We sold a five-bedroom house in Rock for vastly in excess of the £4.95 million asking price this summer. That's the record for an individual house in Cornwall.” However, nerves in the financial markets are having a reverse effect. Land Registry figures show that prices fell by 0.3 per cent in October. The average regional price is now £195,637. Ian Clarke, of Fulfords Country & Waterside in Exeter, says: “There've been fewer viewings since September, but the buyers we have seen are in the market to do business. Agents are having to work harder and sellers having to be a bit more flexible.”

Forecast for 2008

House prices will remain sluggish. Savills forecasts a rise of just 3 per cent (it was 7 per cent this year). Hometrack forecasts a fall in real terms, with prices rising by just 1 per cent next year, less than the rate of inflation, and just 2per cent over the next three years.

Ian Clarke, of Fulfords, believes that the bottom end of the market, which relies on local buyers, will also suffer. He said: “Because of low pay in the area, a lot of first-time buyers find it very difficult to get on the ladder, and now investors are suffering because buy-to-lets are not producing high enough rents to pay the mortgage. A lot will depend on interest rates.”

Winners in 2007 (South East)

Slough: biggest price growth in the region thanks to its proximity to Windsor and the M4.

Winchester: has become a commuter town, as buyers travel farther out to find value.

Farnham: on the edge of Surrey and hence a bit farther from the capital, but it's great if you can't afford Guildford.

Losers (South East)

Burgess Hill: high levels of crime, bad transport system and a lack of good shops might explain why prices have stood still here.

St Leonards: even quieter than Hastings, and almost two hours on the train to London.

Leatherhead: often called “Leatherdead” for its lack of entertainment, it is commuter heaven, but new developments have kept prices down.

Winners (South West)

Rock: known as Chelsea-on-Sea, it is popular with the public school set.

Truro: attractive, decent schools and reasonable shops, pubs and restaurants — no wonder it's the region's most expensive big town.

St Austell: the Eden Project has put it on the map despite its terrible traffic.

Losers (South West)

Westbury: it has missed out on the flood of equity from the South East and prices have remained flat.

Paignton: its sandy beaches attract budget holidaymakers, not wealthy housebuyers.

Exmouth: gets packed out by Exeter day trippers — not what fashion-driven buyers want.

Health check

Glendale, a Grade II listed cottage in Painswick, Gloucestershire, was offered for sale in February for £410,000. It remained unsold and the owners, Michael and Julie Howe, left, took

it off the market in April

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