House prices in the West Midlands are in line for some of the most severe falls in Britain in the aftermath of the global credit crunch.
The information company Experian predicted yesterday that West Midlands house prices will fall by as much as four per cent, although other regions will see increases of 7.7 per cent between the beginning of 2008 and mid-2009.
Overall, Experian expects UK house prices to record their lowest annual growth since the mid-1990s - just 1.2 per cent - as the economy and housing market become direct casualties of the worldwide credit crunch.
Andrew Burrell, of Experian's business strategies division, said: "We expect the UK housing market to suffer over the next two years, with some regions experiencing falls. Price falls look set to be most severe in the Midlands."
Strong West Midlands house prices earlier in the decade have left a legacy of over-valuation in terms of incomes, he explained.
"It leaves the West Midlands more exposed than the rest of the country, combined with a weak outlook for jobs over the next two years," Mr Burrell added.
Experian's autumn survey found that the region's output has grown at close to the national rate this year, but severe job losses in manufacturing are weakening the labour market despite steady growth in services.
This has held consumer spending in the region below that over the country as a whole over the past two years. Consumer confidence continues to trail the national trend and the growth in disposable incomes has also been below average.
Experian's regional breakdown of the latest CBI quarterly Industrial Trends survey shows the West Midlands among the most downbeat regions in expectations of new orders. So far, though, orders have been holding up well and are among the strongest in the country.
The West Midlands emerges as the only region where industrialists expect to have to cut their prices in the home market, as well as a marked fall in their export prices.
"Overall economic performance in the West Midlands was close to the national average in the past three years," Experian reported. "A weak manufacturing outturn over the period was offset by better than average growth in non-manufacturing."
It added "Employment cutbacks in manufacturing remain severe and job creation in services, though still healthy, is rather less impressive than in the previous two years. Easing construction output is also likely to be accompanies by falling job numbers."
Although consumer confidence in the West Midlands has recovered since the early months of this year it remains among the weakest in the UK.
"In combination with weak jobs and disposable income data, this suggests that household spending continues to lag the UK rate by a wide margin," the report concludes.
Experian said the outcome for the housing market could be worse than forecast if mortgage lenders come under pressure to curb lending.
Earlier this week PricewaterhouseCoopers said there is a one in five chance that house prices will fall between now and 2010.
The property website Hometrack and the Council of Mortgage Lenders have both predicted that house prices would rise by just one per cent during 2008, while Capital Economics forecast falls of three per cent in both 2008 and 2009.