The nine year downward trend in unemployment, which has seen the UK jobless figure fall below one million, now seems to be at an end and unemployment is expected to rise over 2002 and 2003. FPDSavills head of residential research, Richard Donnell, said: 'the small projected rise in unemployment will not lead to outright house price falls, which would require a far more fundamental weakening in the economic outlook than is anticipated for 2002. However, combined with other factors such as the weaker growth in household incomes, it will act as a drag on house price growth in the short term.'

The research also highlights concerns over the affordability of housing in London and the South East. In general, falling interest rates have kept houses affordable despite soaring capital values, but in the capital house prices are well ahead of the national average and FPD Savills estimate that 25% of households in London cannot afford a property worth even £75,000, which will barely buy a studio flat in an outer suburb.And the agent says weakening purchasing power over the next 12 to 24 months will only aggravate the problems facing this group.