House prices could start to fall be the end of this year, experts are predicting.

The centre for economic and business research has said that prices could drop by around two per cent in the second half of this year.

High house prices and possible increases in interest rates could combine to put the cost of buying a property beyond the reach of many, say the economic analysts.

But a return to boom and bust is not on the cards, they say. Instead, price rises early this year will be pegged back by the end of 2002.

But they still expect house values to increase by eight per cent over the coming year, with values up 10 per cent by the summer.

"We think that the overall trend will weaken. There has been a huge spurt as interest rates came down and affordability improved," said Cebr chief executive Douglas McWilliams.

"We think there will be a fairly solid rise in house prices by the summer, but by then prices will have reached a point where affordability becomes a constraint and there will be a slowdown in the growth of disposable income, and a rise in interest rates."