On December 6th the Halifax and Nationwide Residential Indices were showing that increases in the UK property prices were continuing to rise; in November the reported increase had been 2.1%. Yet data from Hamptons' network of branches covering London, the South and West Country reveals that in these regions the market had started to fall from as early as May. Vendors will therefore remain confused until the residential indices are split into geographic regions across the country.

Paterson believes that prices will fall by between 5% and 10% between January and June 2003, with the market then levelling off and there being a 2% to 3% increase in the second half of the year.

Estate agent Knight Frank says that we are now living in a two tier market that could not have been predicted even a year ago. Property prices above £1 million ($1.6 million), particularly in the country house market in the South East, are faltering, while middle range properties continue to sell reasonably well, driven by continued low interest rates and a low level of unemployment. Overall the market appears to be regionalising and is increasingly relative to local rather than national economic factors. Areas like Worcestershire, Gloucestershire and Suffolk are doing well.