Two of the top UK house builders are looking forward to a steady housing market after several years of high-speed growth. Both made the announcements while putting in their half-year results. City analysts however, are not optimistic about the housing market's ability to stay a fall.

After several years of house price inflation the market shows real signs of settling down and Crest Nicholson plc welcome this more stable market as they say it provides the base for future sustainable profit growth.

Taylor Woodrow plc also said its UK business had returned to “more normal trading conditions following the strong markets of 2002” and now expected volumes to be flat this year, compared with its previous forecast for low growth.

“The longer term outlook for housing remains positive given low mortgage rates and shortage of supply, especially in the South” commented Crest Nicholson.

The company notes that some markets are vulnerable however but says the greater proportion of their houses are now in sectors that appeal to a wide market and “Crest have negligible exposure to the Inner London market or the top end sector”.

However city analysts are predicting up to 20% falls in house prices. The latest warning of price falls comes from Capital Economics who warns that London is leading the nation into a housing market slump.

The average house price in London fell from £211,891 in the first three months of the year to £210,958 between April and the end of June and Capital Economics see London prices as a driving force for the market.

The analysts also point to the low take up of first time mortgages reported by the Bank of England. May’s figures were 30% down on last year’s.

However, Capital Economics does not foresee the same misery of the last bust in the early 1990s but expects the fall to work through over a two-year period from 2004, rather than in a sudden crash.