THE boom in house prices will continue to fade over the next two years but a crash in the once red-hot property market remains unlikely, the Governor of the Bank of England said yesterday.

Sir Edward George, who will hand over the helm at the Bank to Mervyn King next week after a decade at the top, confirmed that it continues to expect the housing market to cool, with price gains falling to zero in two years’ time.

Speaking on the BBC’s Breakfast with Frost programme, he emphasised: “I don’t think we think there is a real risk of a crash, a fall in the level of house prices across the country as a whole . . . but we do see a continued moderation to a stabilisation possibly over the next couple a years.”

House prices in London and some other parts of the country were expected to drop, he said. But he insisted this should not spell a slump nationwide. “Across the country as a whole, it is moderation in the rate of growth towards stability that we are looking for,” he said.

The Governor's analysis was backed by a snapshot of the market from Rightmove, the property website. Its latest survey for England and Wales found that sellers’ asking prices continued to rise in June, climbing by 1.3 per cent. But it said the year-on-year trend in house price inflation was easing. Its measure of the annual rate of house price gains fell back to 14 per cent in June, from 15.6 per cent in May.

In one positive sign for prices, Rightmove reported that more houses aee coming off the market than being placed with estate agents, marking a shift back to a sellers’ market. But the website argued that, with very high levels of properties available with agents, and low market activity overall, “we are a long way from the boom conditions of 2002”.

Rightmove said a lack of first-time buyers, who were being deterred by high asking prices, was a dampener on activity. It also backed Sir Edward’s analysis that London prices would fall, reporting a 0.2 per cent drop in London asking prices this month.