YORK homeowners will avoid plunging into a negative equity crisis even though the property boom is over, a leading estate agent predicted today.

Kevin Hollinrake, director of Hunters, claimed York prices had been stable since soaring by up to 25 per cent in the seven months up to May 2002.

That increase had pushed the cost of a typical first-time buyer property from about £70,000 to £90,000.

Prices had risen just slightly over the past seven months, and he expected the modest increases to continue over the next five years.

This might leave a typical first-time buyer property rising in value to about £120,000 by 2008.

He said the housing market was still active, and he was confident no negative equity problems would emerge, as had happened after the last property boom in the late 1980s.

He said that interest rates were low and would, if anything, fall even further in coming months, meaning that people could afford to take out mortgages at several times their salary.

He said the speculative buy-to-let investor had played a major role in the boom of last year, piling out of stocks and shares as the stock market slumped post-September 11.

But that kind of investor, looking for a "fast buck", had now disappeared in the face of stabilising prices, although others looking for a long-term investment were still out there buying properties.

There was also still demand for property from first-time buyers, with York enjoying low unemployment and becoming increasingly popular as a place for Leeds commuters to live.

Other York estate agents agreed that prices were stabilising, but very unlikely to fall.

Ben Hudson, of Hudson Moody, said he believed prices might rise a little more, but the surging increases were over.

He believed they would level out and stabilise, but did not think they would drop and lead to negative equity. "Anyone waiting for prices to fall may be waiting for a very long time," he said.

Martin Grayshon, of Stephensons, said prices had stabilised since last August and he expected them to remain stable, but with a possible slight rise over the coming year. "I don't think there's any downward trend." He said York and North Yorkshire property prices were very different to London and the Home Counties - they never rose so high here but nor did they fall either.

Updated: 09:05 Wednesday, January 15, 2003