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The Royal Institution of Surveyors (RICS) is predicting that house prices will be flat in 2008 and there is a ten percent chance of them suffering a 1990’s style crash.

It is the effect of recent interest rates rises that will subdue the property market, rather than the recent turmoil in the banking industry, according to RICS. However should the credit crisis extend into next year, then house prices could be hit more than is currently being predicted.

For all those buy to let investors looking for capital growth as their main means of earning from their property investments, this is bad news. Mortgage rates will probably remain high for quite a few months and rental incomes are unlikely to increase significantly, particularly if house prices become more affordable.

Even Alan Greenspan, the much admired former chairman of the Federal Reserve in the the United States, is predicting trouble in the UK housing market. This is because so many home owners in the UK have variable rate mortgages and are vulnerable to increased interest rates.

So if you are looking to invest in property at the moment, everything is pointing to keeping your cash in a high earning deposit account instead, unless you can negotiate a stunning deal in a quieter property market.